The Hong Kong Monetary Authority (HKMA) announced that it has reduced its base interest rate by 0.5% to 5.25% with immediate effect yesterday, 19 September 2024.
This adjustment aligns with a recent decision by the US Federal Reserve, which lowered its interest rate by 50 basis points to the 4.75%-5.00% range on 18 September 2024.
Hong Kong’s monetary policy closely follows that of the United States, as the city’s currency is tightly pegged to the US dollar within a 7.75% to 7.85% range.
The HKMA stated that the US interest rate cut would positively influence Hong Kong’s economy and provide some leeway for reducing local interest rates.
“In Hong Kong, our financial and monetary markets have continued to operate in a smooth and orderly manner. Market liquidity condition has remained stable with the Hong Kong dollar exchange rate hovering within the convertibility zone,” HKMA Acting Chief Executive Howard Lee told reporters.
“The rate cut cycle has just begun; interest rates will remain at a relatively high level in the foreseeable future. The public should carefully assess and continue to manage the interest rate risk when making property purchase, mortgage or other lending decisions,” Lee added.
HSBC and Bank of China (Hong Kong) both announced cuts to their lending rates in Hong Kong. HSBC lowered its rate to 5.625% (effective 20 September 2024), while the Bank of China lowered its prime rate to 5.625% from 5.875% (effective 23 September 2024).
