HKMA warns of risks as Hong Kong follows Fed in keeping interest rate unchanged
Hong Kong’s de facto central bank has warned the public to beware of interest rate uncertainties this year after leaving its base rate unchanged, following a similar move overnight by the US Federal Reserve, leaving borrowers in the city with a longer wait for funding costs to fall. The Hong Kong Monetary Authority (HKMA) announced…
Hong Kong’s de facto central bank has warned the public to beware of interest rate uncertainties this year after leaving its base rate unchanged, following a similar move overnight by the US Federal Reserve, leaving borrowers in the city with a longer wait for funding costs to fall.
The Hong Kong Monetary Authority (HKMA) announced its decision on Thursday morning to keep the city’s base rate at 4 per cent. Hours earlier, the Fed also kept its target rate in the range of 3.5 per cent to 3.75 per cent, after the first meeting of the Federal Open Market Committee (FOMC) this year.
“The future trend of US interest rates remains quite uncertain, which may influence the interest rate environment in Hong Kong,” the HKMA said. “The public should carefully manage interest rate risks when making decisions about property purchase, investment or borrowing.”
The pause came after the Fed and the HKMA cut their key interest rates by a total of 75 basis points over the last three FOMC meetings since September.
“I think, and many of my colleagues think, it is hard to look at the incoming data and say that policy is significantly restrictive at this time,” Fed chairman Jerome Powell said in a media briefing after the FOMC meeting, indicating that there was no need to rush to cut rates.
The Fed’s decision was widely expected. More than 97 per cent of traders expected no change, according to the CME’s FedWatch data based on the Fed funds futures contracts on Wednesday.
