, Columnist
How Gulf States Can Offset the Dollar's Pull
The region needs structural reforms that diversify the economy away from oil.
Downturn.
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In December, Gulf Arab central banks wasted little time in following the Federal Reserve’s interest-rate increase, maintaining a commitment to the U.S. dollar peg. The Fed is likely to undertake two or three rate increases throughout this year. Because of its currency pegs to the dollar, the Gulf region must stay in line with U.S. monetary policy or it could experience debilitating capital outflows. Gulf Cooperation Council countries are experiencing higher interest rates while oil prices are still low and the greenback is gaining in strength, all of which can place pressure on growth.