DUBAI: Most stock markets in the Gulf ended higher on Thursday after benign US consumer inflation data overnight reinforced bets that the Federal Reserve would start cutting interest rates next month.

The Fed’s policy stance is particularly significant in the Gulf since monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by the Fed’s decisions. Most regional currencies are pegged to the US dollar.

Traders remain convinced that the Fed will reduce rates on Sept. 18 for the first time in 4-1/2 years, but are split on whether policymakers will opt for a super-sized 50 basis-point reduction. While inflation is slowing, signs it may remain sticky spurred a reduction of bets on a larger cut to 37.5% from about 50% a day earlier.

US retail sales rose more than expected in July, which could help allay financial market fears of a sharp economic slowdown that were fanned by a jump in the unemployment rate.