Hong Kong Monetary Authority: The Federal Reserve's continued interest rate cuts will not affect Hong Kong's financial and monetary stability

Zhitong
2024.11.08 02:47
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The Hong Kong Monetary Authority stated that after the Federal Reserve cut interest rates by 25 basis points to 4.5-4.75%, it has lowered the base rate of the discount window to 5%. The Monetary Authority emphasized that this rate cut will not affect the financial and monetary stability of Hong Kong, with market liquidity remaining stable and the Hong Kong dollar exchange rate stable. Future rate cuts will depend on U.S. economic data, and the Monetary Authority will closely monitor market changes to ensure financial stability in Hong Kong

According to the Zhitong Finance APP, after a two-day meeting, the Federal Open Market Committee of the Federal Reserve announced a 25 basis point rate cut early on November 8th Hong Kong time, lowering the target range for the federal funds rate to 4.5-4.75%. The Hong Kong Monetary Authority (HKMA) has adjusted the base rate of the discount window to 5% in accordance with established mechanisms, effective immediately.

The HKMA stated that the Federal Reserve, as the market expected, further lowered interest rates and implemented a more accommodative monetary policy. However, the pace of future rate cuts will depend on U.S. economic data, which will be influenced by fiscal and trade policies, thus there remains considerable uncertainty. Additionally, the monetary policy environment of major economies may not be fully synchronized, making the risk of global market volatility a concern.

The operation of Hong Kong's financial and monetary markets remains smooth, with stable market liquidity and a stable Hong Kong dollar exchange rate. Under the linked exchange rate system, the Hong Kong dollar interbank offered rate is generally approaching the U.S. dollar interest rate, while shorter-term interbank rates are also influenced by local market supply and demand for Hong Kong dollar funds, such as seasonal factors and capital market activities.

Regarding deposit and loan interest rates, banks generally consider factors such as interbank market supply and demand, interbank offered rates, and their own funding cost structures to assess whether adjustments are necessary and the extent of those adjustments. The U.S. rate cut cycle is still in its early stages, and interest rates may remain at relatively high levels for some time. Citizens should continue to carefully consider and manage interest rate risks when making decisions about property purchases, mortgages, or other borrowing.

The decision to continue cutting rates in the U.S. will not affect the financial and monetary stability of Hong Kong. The HKMA will closely monitor market changes, including interest rate trends and global capital flows, to ensure the financial and monetary stability of Hong Kong

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