The Hong Kong Monetary Authority kept its base rate at 4% unchanged, mirroring the US Federal Reserve's decision to hold rates steady. This leaves borrowers in the city waiting longer for funding costs to fall amid ongoing uncertainties. The authority urged the public to manage interest rate risks carefully in decisions on property, investments, or borrowing.
The Hong Kong Monetary Authority (HKMA) announced on Thursday morning that it would keep the city's base rate at 4% unchanged. Hours earlier, the US Federal Reserve (Fed) maintained its target rate in the range of 3.5% to 3.75% following the first Federal Open Market Committee (FOMC) meeting of the 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."
Under the currency peg known as the Linked Exchange Rate System since 1983, Hong Kong's monetary policy has moved in lockstep with the Fed. However, commercial banks can decide when and by how much to cut their prime and savings rates.
The city's three note-issuing banks—HSBC, Standard Chartered, and Bank of China (Hong Kong)—stated on Thursday that they would keep their prime lending and savings rates unchanged. This decision came as no surprise to the market. Savings rates have been cut close to zero since October, while any reduction in the prime rate would erode banks' net interest margin, affecting their profitability.
Analysts see the first US rate cut in June, with a falling Hong Kong interbank rate set to bring relief to borrowers. Keywords include FOMC, CME FedWatch, Arthur Yuen Kwok-hang, Donald Trump, Hang Seng Bank, Allianz Global Investors, Michael Krautzberger, and Jerome Powell, though the article does not detail their specific roles.
