Trump calls for urgent rate cut: Could the next interest rate cut come sooner than expected?

Lower US rates could ripple through global markets — and your UAE borrowing costs too

Last updated:
Justin Varghese (Your Money Editor)
2 MIN READ
US President Donald Trump's comments on rushing rate cuts aren’t just political noise — for UAE-based borrowers, investors, and even homebuyers, this push could have ripple effects that reach your wallet.
US President Donald Trump's comments on rushing rate cuts aren’t just political noise — for UAE-based borrowers, investors, and even homebuyers, this push could have ripple effects that reach your wallet.
AFP

Dubai: US President Donald Trump has renewed his call for the US Federal Reserve to cut interest rates, pointing to softer inflation figures and falling prices on essential goods. But his comments aren’t just political noise — for UAE-based borrowers, investors, and even homebuyers, this push could have ripple effects that reach your wallet.

In a social media post, Trump said: “No inflation, and prices of gasoline, energy, groceries, and practically everything else, are DOWN!!!” He then went on to criticise Fed Chair Jerome Powell, demanding that interest rates be lowered like they’ve been in Europe and China. “Just let it all happen, it will be a beautiful thing!” he added.

Trump’s remarks follow fresh inflation data out of the US showing a 0.2% rise in the consumer price index (CPI) for April — weaker than expected and the third straight month inflation came in below forecasts. This has sparked renewed speculation that the US central bank could cut interest rates sooner than anticipated. So, what does this mean for us in the UAE?

Why UAE residents should care
Interest rate decisions by the US Federal Reserve don’t stay within US borders. Because the UAE dirham is pegged to the US dollar, any move by the Fed — up or down — is usually mirrored by the UAE Central Bank. So, if Trump’s pressure leads to an earlier rate cut in the US, UAE mortgage rates and loan costs could also fall.

This is especially important for residents repaying home loans or planning big-ticket financing. Lower interest rates could ease monthly payment burdens and even revive some real estate interest after a period of high borrowing costs.

Not a done deal just yet
Still, rate cuts aren’t guaranteed. Fed officials remain cautious. While inflation is easing, they remain concerned about potential risks — including fallout from tariffs and the broader economic uncertainty Trump’s own trade policies have stirred up.

Some US economists believe the recent decline in inflation might be temporary, pointing out that many imported goods affected by Trump’s tariffs haven’t fully shown up in prices yet. Others note that falling airfares and hotel prices suggest consumers are pulling back, possibly signalling weakening demand.

Bottom line
For UAE residents, it’s worth watching how this plays out. If softer inflation leads the Fed to cut rates — and the UAE follows suit — we could see some relief on loan costs. Until then, Trump’s loud calls may be just another chapter in the ongoing rate-cut debate — but one that could have real-world effects closer to home.

- With inputs from Agencies

Sign up for the Daily Briefing

Get the latest news and updates straight to your inbox

Up Next