Hong Kong central bank keeps key rate unchanged, tracking Fed move

By Thomson Reuters Mar 20, 2024 | 10:29 PM

HONG KONG (Reuters) – The Hong Kong Monetary Authority (HKMA) left its base rate charged through the overnight discount window unchanged at 5.75% on Thursday, tracking a move by the U.S. Federal Reserve to keep rates steady.

Federal Reserve Chair Jerome Powell said on Wednesday recent high inflation readings had not changed the underlying “story” of slowly easing price pressures in the U.S. as the central bank stayed on track for three interest rate cuts this year and affirmed that solid economic growth will continue.

HKMA said the Fed might cut rates three times for a total of 75 basis points this year, but the actual timing and the interest rate path thereafter remain uncertain and the high interest rate environment may last for some time.

“The financial and monetary markets of Hong Kong continue to operate in a smooth and orderly manner,” HKMA said in a statement.

“The Hong Kong dollar exchange rate remains stable, and the Hong Kong dollar interbank rates might remain high for some time,” HKMA said, adding the public should manage the relevant risks when making property purchase, mortgage or other borrowing decisions.

Hong Kong’s monetary policy moves in lock-step with the United States as the city’s currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar.

(Reporting by Donny Kwok; Editing by Jacqueline Wong)