HKMA warns high interest rates likely for some time
The Hong Kong Monetary Authority (HKMA) said on Thursday that local interest rates may remain at current high levels for a period of time, calling on borrowers to manage their loan risks. The US central bank, the Federal Reserve, raised its benchmark lending rate on Wednesday to the highest level since 2001 to tackle above-target inflation. The HKMA followed suit, raising its base rate on Thursday to 5.75 percent with immediate effect, according to a pre-set formula. Speaking to the media, the authority's acting Chief Executive Arthur Yuen pointed out that the Fed's post-meeting statement said that future interest rate trends will depend on a series of factors, including US inflation and employment data. "According to US data, inflation remains high. So, the current high interest rate environment may need to be maintained for a period of time," he said. Yuen reminded the public that the Hong Kong dollar interest rate has gradually increased, and they should be prepared for fluctuations in bank lending rates and carefully manage their risks. He said the Hong Kong dollar has been relatively strong in recent months, mainly due to the demand for funds brought about by dividend payments. The HKMA relaxed home loan rules earlier this month but Yuen said the move was aimed at stabilising the banking system, not bolstering property prices.