Reuters reported on Thursday that the Hong Kong Monetary Authority (HKMA) opted to keep its base rate steady at 5.75 per cent, in line with the US Federal Reserve’s decision to hold rates unchanged.
While the Fed hinted at potential future rate cuts to address economic concerns, worries about persistent inflation may postpone such actions.
Acknowledging this uncertainty, the HKMA emphasized in its statement that the prevailing high-interest rate environment might persist for some time.
Despite these concerns, Hong Kong’s financial markets remain stable, with the Hong Kong dollar maintaining its pegged range against the US dollar.
However, the HKMA anticipates that interbank rates in Hong Kong dollars will remain elevated for the foreseeable future.
This decision underscores the close alignment between monetary policies in Hong Kong and the US, given the Hong Kong dollar’s peg to the US dollar. Consequently, major banks in Hong Kong, such as HSBC Holdings, have also chosen to maintain their lending rates.
