Hong Kong Holds Base Rate at 4.75% as U.S. Fed Keeps Rates Steady

The Hong Kong Monetary Authority (HKMA) maintained its base rate at 4.75% on Thursday, aligning with the U.S. Federal Reserve’s decision to keep interest rates unchanged. Hong Kong’s monetary policy follows the Fed closely due to its currency peg to the U.S. dollar within a 7.75-7.85 range.

The Fed left its benchmark rate steady at 4.25%-4.50% and reaffirmed its forecast for two quarter-point cuts by year-end, despite projecting slower economic growth and persistent inflation. In response, HKMA cautioned that local interest rates may remain elevated for an extended period, as future U.S. rate adjustments remain uncertain. The authority advised the public to assess interest rate risks carefully when making financial decisions, such as purchasing property or taking out mortgages.

Despite steady interest rates, Hong Kong’s financial markets continue to function smoothly, with stable liquidity conditions and a firm Hong Kong dollar exchange rate.

The city’s economic outlook remains tied to the Fed’s monetary stance, and investors are closely watching for potential rate cuts that could impact borrowing costs and asset prices.