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Banking & finance
BusinessBanking & Finance

Hong Kong holds base rate at 5.75% while US Fed assures market that delayed rate cuts have not been derailed

  • The Hong Kong Monetary Authority on Thursday left its base rate unchanged for the sixth time in a row since July 2023
  • HSBC, Standard Chartered and BOCHK to relay their decision on whether to raise prime rates later in the day

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Pedestrians passed a backdrop of the city skyline on a street in the Central district in Hong Kong. Photo: Bloomberg
Enoch Yiu
Hong Kong kept the city’s key interest rate unchanged for the sixth consecutive time in lockstep with the Federal Reserve’s overnight decision, as stubborn inflation in the United States pushed back expectations of a rate cut to September.
The Hong Kong Monetary Authority (HKMA) said on Thursday it would leave its base rate unchanged at 5.75 per cent. Hours earlier, the Fed kept its target rate in a range between 5.25 per cent and 5.5 per cent, citing several “hotter-than-expected” price and growth reports.

“In recent months, inflation has shown a lack of further progress toward our 2 per cent objective,” Fed Chairman Jerome Powell said. “It is likely that gaining greater confidence will take longer than previously expected.”

The HKMA follows the Fed’s rate decision in lockstep since 1983 by design under its linked exchange rate system to preserve the local currency’s peg to the US dollar.

The HKMA and the Fed have kept their key lending rate at the current level since July 2023 when they last raised rates by 25 basis points. The US and Hong Kong have increased their rates 11 times between March 2022 and July 2023, taking it to the highest level since December 2007.

The Federal Reserve building in Washington DC on April 3, 2012. Photo: Reuters
The Federal Reserve building in Washington DC on April 3, 2012. Photo: Reuters

Core US inflation rose 3.7 per cent in the first quarter, above the Fed’s target of 2 per cent.

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