On March 4, 2020, people wearing masks walked past the Hong Kong Monetary Authority in Hong Kong. The Hong Kong Monetary Authority bought HK$1.586 billion ($202 million) from the market on Thursday to stem the currency's weakening and break its peg to the U.S. dollar, the de facto central bank's first intervention in 18 months.
Zhang Wei | China News Service | Getty Images
The Hong Kong Monetary Authority on Thursday lowered the base interest rate charged through the overnight discount window by 50 basis points to 5.25%, following the Federal Reserve's move.
Hong Kong’s monetary policy is in sync with the United States currency Pegged to the U.S. dollar, the exchange rate fluctuates between 7.75-7.85 USD to 7.75 USD.
The Monetary Authority said that the U.S. interest rate cut will have a positive impact on the economy of the Asian financial center and will provide some room for local interest rate easing.
Lee Tak-chi, acting chief executive of the Hong Kong Monetary Authority, told reporters: “Hong Kong's financial and currency markets continue to operate smoothly and orderly. Market liquidity conditions remain stable, and the Hong Kong dollar exchange rate hovers within the conversion zone.”
Li added: “The interest rate cutting cycle has just begun and interest rates will remain at relatively high levels for the foreseeable future. The public should carefully evaluate and continue to manage interest rate risks when making decisions about home purchases, mortgages or other loans.”
Major banks in Hong Kong are following closely behind HSBC Hong Kong's prime lending rate will be lowered by 25 basis points to 5.625% starting from September 20. Bank of China (Hong Kong) said it will lower Hong Kong's prime lending rate from 5.875% to 5.625% starting from September 23.
Hang Seng Bank chief economist Shi Zhikang said, “Although uncertainty about future U.S. interest rates still exists, the direction is becoming increasingly clear. Hong Kong interest rates are expected to be relaxed accordingly, which will help support Hong Kong's economic growth.”
On Wednesday, the Federal Reserve began an expected series of rate cuts that were deeper than usual.
“Lower interest rates are intuitively positive for real estate, but the impact on Asia's real estate markets and equity markets will be uneven,” Morgan Stanley said in a research note. He added that lower mortgage rates would provide Hong Kong with a better financial environment than Singapore. Greater support.
