HKMA tracks Fed's decision and keeps rate steady
The Hong Kong Monetary Authority (HKMA) on Thursday left its base rate unchanged at 5.75 percent, tracking a decision by the US Federal Reserve to keep its key lending rate steady. Fed policymakers voted unanimously to maintain the benchmark interest rate between 5.25 and 5.5 percent, and said there is likely to be only one cut, of a quarter of a percentage point, this year.  In an online press call, Mackie Lau, Standard Chartered's co-Head of Treasury Markets in Greater China, North Asia and Hong Kong, said the Fed's decision to keep the rate unchanged was in line with market expectations. Lau said there is no rush for the Fed to start cutting rates, as there are indications of resilience in the US economy. "In the Fed's perspective, I think they do want to see inflation completely under control, and they would take a lot more comfort to act when the time comes. So I think at this juncture, the market is kind of expecting the first cut to come in September. That is very much in line with the dot plot that was released last night," he explained.  In a statement, the HKMA said that with recent economic data showing mixed signs and inflation remaining high, it's uncertain when the Fed will start cutting interest rates. It added that Hong Kong's financial and monetary markets continue to operate in a smooth and orderly manner, and the Hong Kong dollar exchange rate remains stable. Leading local banks, including HSBC, Bank of China (Hong Kong) and Standard Chartered, announced they were keeping their rates unchanged. Cheung Sze-kei, Head of Wealth Strategy and Insights Division at Bank of China (Hong Kong), said the Fed's decision to maintain its interest rates was to prevent a sharp rebound in US inflation. Cheung explained that while inflation in the US had been on a downward trajectory, the local job market and economy displayed strength, demonstrating resilience in inflationary pressures. As a result, Cheung said the Fed had adopted a prudent approach in managing interest rates._____________________________
Last updated: 2024-06-13 HKT 16:42 