Daily Economic Update

US: Several Fed officials pitch for a cautious monetary policy stance, but Miran defends his aggressive rate cuts pitch. In separate remarks, several Fed members continued to call for a cautious approach to monetary policy ahead given higher inflation concerns and mixed job market conditions. St Louis Fed President Alberto Musalem, an FOMC voting member this year, saw “limited room for easing further without policy becoming overly accommodative” amid inflation risks, even though he supported the Fed’s decision last week to cut rates by 25 bps to support the labor market “against further weakening.” Cleveland Fed President Beth Hammack, who would vote on FOMC decisions next year, stated that with the labor market robust amid low unemployment, the Fed “should be very cautious in removing monetary policy restriction.” Similarly, Richmond Fed President Thomas Barkin noted that “consumers are spending nicely” given that “unemployment is low, real wages are increasing, and stock market valuations are healthy.” Meanwhile, Atlanta Fed President Raphael Bostic mentioned that he saw only one more rate cut in 2025 as he remained “concerned about the inflation that has been too high for a long time.” By contrast, recently appointed Fed Governor Stephen Miran renewed his calls to cut interest rates aggressively, saying “leaving short-term interest rates roughly two percentage points too tight risks unnecessary layoffs and higher unemployment” and seeing a much lower level of the neutral rate “resulting from changes in border and fiscal policies.” Miran was the lone dissenter in the FOMC meeting last week, when he pitched for a larger 50-bps reduction while his projections call for an additional 150 bps cumulative cut by the end of 2026. He vowed to continue dissenting “until [his] view changes.” We note that the FOMC’s envisaged rate cuts this year and in 2026 carry significant uncertainty given the still unclear impact of tariffs on inflation and mixed labor market indicators.  

Qatar: Non-hydrocarbon economic growth softens but remains solid. Preliminary GDP estimates show that the economy grew 1.9% y/y in Q2 2025, moderating from 4.9% in the previous quarter amid a softer increase in non-hydrocarbon activity and a contraction in hydrocarbon output. Non-hydrocarbon GDP expanded by a robust 3.4% y/y, easing from 7.3% in Q1 2025, a reading that was boosted by a significant base effect in financial and insurance activities (+28% y/y in Q1), the second largest component in the non-hydrocarbon sector. While most sectors experienced slowdowns from the prior quarter, growth was still firm in construction (+8.7% y/y), wholesale & retail trade (+8.8% y/y), and accommodation & food service activities (+13.5% y/y) categories. Solid growth here, concurrent with a 0.9% y/y fall in hydrocarbon output, boosted the non-hydrocarbon sector’s share of total GDP to a record 65.6%, highlighting the government’s efforts to diversify the economy. The outlook, despite the Q2 slowdown, remains bright with LNG expansion expected to come online in mid-2026, although the recent Israeli strikes on Doha as well as further hostile activity could impact tourism’s contribution to future growth.

UAE: Government aims to increase startups by more than two million in 2031. The Minister of Economy and Tourism has announced that the government aims to increase the number of registered companies to more than two million by 2031, up from a current 1.2 million. The minister also said that the focus will shift to nurturing startups and aspiring entrepreneurs to become the “The Startup Capital of the World”. The authorities seek at least ten unicorns (privately held startups valued at over $1 billion) emerge within this period, building on the success of five unicorns already established in the UAE. This vision will be supported by already-established strategies that include economic clusters, food security, and economic openness through Comprehensive Economic Partnership Agreements on trade and investment, as well as strategies for innovation and intellectual property protection.

Egypt: Public debt reached $310 billion in Q2 2025. Total public debt (domestic and external) increased by 1.8% q/q to EGP14.9 trillion ($310 billion) in Q2, up from EGP14.7 trillion in the previous quarter, as per the latest figures released by the Ministry of Planning and Economic Development. This increase was driven by domestic public debt, which rose by 3.5% q/q to EGP 11.1 trillion ($229 billion), compared to EGP 10.7 trillion at the end of Q1. On the other hand, external public debt declined by 2.7% q/q to EGP3.9 trillion ($80.7 billion), down from EGP4 trillion in Q1. With the economy growing faster than the government’s projections (although final figures have not yet been released), this should help bring down public debt as a share of GDP to the targeted level of 85.6% by end-June 2025. In the same context, Egypt is preparing to repay $750 million of Eurobonds on October 6. This repayment will help to lower external public debt even more if not replaced with a new Eurobond issuance. New issuances of international bonds usually depend on market appetite and the prevailing rate in the market, both of which are now more accommodative for Egypt. The next Eurobond maturity after this one will be February 2026 with the same amount.
 

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