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Hong Kong keeps rate steady for seventh time as traders shift hope of cuts to later this year
- The city’s base rate remains at 5.75 per cent after the US Fed kept its target rate unchanged
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Hong Kong’s de facto central bank kept its base rate unchanged for the seventh time – with local lenders following suit – as traders in the financial markets shift their attention to later this year in expectation of the first cut in borrowing costs.
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The city’s base rate remains at 5.75 per cent, the Hong Kong Monetary Authority (HKMA) said early on Thursday morning. Hours earlier, the US Federal Reserve said it would keep its target rate in the range of 5.25 per cent to 5.5 per cent in line with expectations, pencilling in one cut this year.
The city’s six major lenders, including note-issuing banks HSBC, Standard Chartered and Bank of China (Hong Kong), all followed the HKMA and kept their key lending and deposit rates unchanged, which means mortgage borrowers and companies face a longer wait for relief from high borrowing costs.
“The most recent inflation readings have been more favourable than earlier in the year, and there has been modest further progress toward our inflation objective,” Fed Chairman Jerome Powell said after a two-day meeting. “We’ll need to see more good data to bolster our confidence that inflation is moving sustainably toward 2 per cent.”
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The Fed’s policymakers signalled just one rate cut this year, pencilling in four reductions in 2025. That did little to douse the fervour in the stock market, as the S&P500 index surged past 5,400 points for the first time. The benchmark ended the day at 5,421.03, a gain of 0.85 per cent.
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