THE Hong Kong Monetary Authority (HKMA) followed the Federal Reserve in holding its base rate as US officials signalled fresh concerns about inflation.

The HKMA left rates unchanged at 5.75 per cent on Thursday (May 2). The decision came after the Fed held interest rates at a two-decade high for the sixth time in a row, a decision expected by all economists surveyed by Bloomberg.

The Asian finance hub’s monetary policy moves in lock-step with the US as the local currency is pegged to the greenback. Elevated borrowing costs in recent years have weighed on the city’s recovery from a pandemic slump and its real estate sector.

Hong Kong’s growth is expected to slow this year, dragged also by weak demand in mainland China. The city will report GDP data for the first quarter this year on Thursday afternoon. BLOOMBERG