Expert reactions on the decision and its implications for markets and investor sentiment
The Federal Reserve kept interest rates unchanged at its latest meeting, maintaining a cautious stance as policymakers continue to monitor inflation, labour market conditions, and broader economic developments.
Below are expert reactions on the decision and its implications for markets, monetary policy, and investor sentiment.
Hamza Dweik, Head of Trading (MENA), Saxo Bank
Yesterday’s Federal Reserve meeting delivered a familiar outcome on the surface, but a more meaningful shift underneath. The Fed held rates unchanged at 3.50% to 3.75%, which was fully priced in, but the messaging marked a clear pivot away from any easing bias and back toward inflation control as the dominant priority.
What stood out most from Kevin Warsh’s (Chair, US Federal Reserve) first press conference was the change in communication style. The shorter statement and reduced reliance on forward guidance suggest a Fed that is deliberately stepping back from guiding markets and returning to a more reactive, data-driven approach.
Vijay Valecha, Chief Investment Officer, Century Financial
FOMC (Federal Open Market Committee) comment with impact on the UAE market/economy
Source: Reuters, Summary of Economic Projections (SEP)
The US Federal Reserve kept interest rates unchanged at 3.50%–3.75% at its June meeting, but the key takeaway was the increasingly hawkish tone from policymakers. Updated projections showed that 9 of the 19 FOMC members now expect at least one rate hike this year, compared with none just a few months ago, reflecting concerns that inflation could remain sticky despite moderating economic growth.
For the UAE, the decision reinforces the likelihood of a higher-for-longer interest rate environment because the dirham is pegged to the U.S. dollar requiring the UAE Central Bank to broadly align its policy with the Fed. The non-oil private sector PMI stood at 52.6 in May, indicating continued expansion while non-oil GDP grew 6.8% in 2025.
From a UAE market perspective, the Fed’s updated projections suggest that interest rates could remain elevated for longer, which is generally positive for the UAE banking sector given its ability to benefit from higher lending margins and strong profitability.
Madhur Kakkar, Founder and CEO, Elevate Financial Services
Kevin Warsh’s first Fed meeting marks a clear regime change at the central bank. The Fed held rates steady at 3.50%-3.75%, but the policy statement was dramatically hawkish with all “bias toward rate cuts” language removed and forward guidance entirely eliminated.
US equities sold off into the close, losses steepening through his press conference, the S&P 500 fell 1.2%, the Nasdaq 1.3%, and the Dow 507 points. S&P 500’s worst reaction to a new Fed chair’s first meeting since 1994, with bond yields rising.
Joshua Owen, UK CEO, Lunaro Financial Services
Kevin Warsh framed his vision for how he sees the Federal Reserve operating and in particular, communicating, over the course of his tenure. The emphasis on dropping forward guidance and reining in the Fed’s effect on markets because of its communication policy was front and centre. Indeed, the length of the released statement was significantly shorter than previous versions whilst the future of the Dot-Plot was also called into question.
Warsh highlighted that current Fed policy may well be restrictive in housing whilst not so much in financial markets, whether future policy brings those into convergence will be keenly watched by investors.
