HKMA Cuts Base Rate

HONG KONG (Reuters) – The Hong Kong Monetary Authority (HKMA) cut its base rate by 25 basis points on Friday, bringing it to 5.0%. This move aligns with the U.S. Federal Reserve's recent decision.

Currency Peg

The Hong Kong dollar is pegged to the U.S. dollar within a tight range of 7.75 to 7.85. Therefore, changes in U.S. monetary policy directly influence Hong Kong's rates.

Future Rate Cuts

The HKMA highlighted that the pace of future rate cuts remains uncertain, heavily dependent on U.S. economic data influenced by fiscal, economic, and trade policies. They issued a statement regarding this uncertainty.

U.S. Federal Reserve

The Federal Reserve cut rates by a quarter percentage point on Thursday while assessing a potentially complex economic landscape with the incoming administration of President-elect Donald Trump. Fed Chair Jerome Powell reassured that the election results would not impact near-term monetary policy.

Stability in Hong Kong

The HKMA emphasized that the initial stage of the U.S. rate-cut cycle would not jeopardize Hong Kong's financial and monetary stability. Financial markets in Hong Kong have been operating smoothly.

Interest Rates Outlook

The HKMA cautioned that interest rates may remain relatively high for some time, urging borrowers to carefully assess and manage interest rate risks, particularly when making decisions related to property purchases and mortgages.