Hong Kong holds rate as Fed sticks to rate cut outlook

THE Hong Kong Monetary Authority (HKMA) followed the Federal Reserve in holding its base rate, as United States officials maintained their outlook for three interest-rate cuts this year.

The HKMA left rates unchanged at 5.75 per cent on Thursday (Mar 21). The decision came after the Fed held interest rates at a two-decade high for the fifth time in a row, a decision expected by all economists surveyed by Bloomberg.

The Asian finance hub’s monetary policy moves in line with the US as the local currency is pegged to the greenback. High borrowing costs in recent years have weighed on the city’s recovery from a pandemic slump and its property sector, with home sales last year falling to the lowest in nearly three decades.

The HKMA’s announcement comes amid a wave of central bank decisions globally, with many widely expected to hold rates until policy shifts in the US. The Bank of England is also set to leave their key rate at a 16-year high of 5.25 per cent later on Thursday. BLOOMBERG