Hong Kong central bank cuts interest rate after Fed move

HONG KONG :The Hong Kong Monetary Authority (HKMA) cut by 25 basis points on Friday its base rate charged via the overnight discount window, to 5.0 per cent, tracking a move by the U.S. Federal Reserve.
The Asian financial hub’s monetary policy moves in lock-step with the United States as its currency is pegged to the greenback in a tight range of 7.75 to 7.85 a dollar.
“The pace of future rate cuts remains uncertain as it is subject to U.S. economic data, which will be influenced by fiscal, economic and trade policies,” the HKMA said in a statement.
The Fed cut rates by a quarter of a percentage point on Thursday as it began taking stock of what could become a more complex economic landscape when President-elect Donald Trump takes office next year.
Fed Chair Jerome Powell said the results of Tuesday’s presidential election would have no “near-term” impact on U.S. monetary policy.
The HKMA said the U.S. rate-cut cycle was still at an initial stage and the decision to cut rates would not affect Hong Kong’s financial and monetary stability.
The financial and monetary markets had continued to operate in a smooth and orderly manner, it added.
“Interest rates might still remain at relatively high levels for some time,” the HKMA said, urging careful assessment and management of the interest rate risk when making property purchase, mortgage or other borrowing decisions.