The Hong Kong Monetary Authority (HKMA) has cut its base interest rate by half a percentage point to 5.25%, marking its first rate reduction since 2020. The move comes in response to the Federal Reserve's recent policy easing, as the city's currency is pegged to the US dollar. This decision is expected to loosen borrowing conditions in the financial hub, providing relief to businesses and consumers grappling with years of steep borrowing costs.
The Fed's own half-point rate cut hours earlier set the stage, though Fed Chair Jerome Powell warned against assuming the reduction would continue at the same pace. Traders, however, are betting on further US rate cuts, with another 70 basis points of reductions expected at the Fed’s two remaining meetings this year.
Hong Kong's rate cut comes at a crucial time for its economy, which has been weighed down by high borrowing costs and a struggling real estate market, with property prices at their lowest since 2016. The move could provide much-needed stimulus to economic growth and the beleaguered housing sector.
Following the HKMA's decision, major banks like HSBC Holdings, the city's largest lender, are expected to announce changes to their lending rates later in the day, potentially marking HSBC's first policy easing since 2019.
However, despite the Fed's rate cuts, the move may not prompt an immediate reaction across Asia, as central banks in the region, including the Bank of Japan, are more focused on maintaining financial stability. The BoJ is expected to keep borrowing costs unchanged in its upcoming meeting.
Comments
Post a Comment