Hong Kong central bank keeps base rate unchanged as Fed holds steady

Reuters
01-30
Hong Kong central bank keeps base rate unchanged as Fed holds steady

HONG KONG, Jan 30 (Reuters) - The Hong Kong Monetary Authority left its base rate unchanged at 4.75% on Thursday, tracking a move by the U.S. Federal Reserve to keep rates steady.

Hong Kong's monetary policy moves in lock-step with the United States as the city's currency HKD=D3 is pegged to the greenback in a tight range of 7.75-7.85 per dollar.

"The policy decision is in line with market expectations. However, the pace of future rate cuts remains uncertain," HKMA said in a statement on Thursday.

"Interest rates in Hong Kong might still remain at relatively high levels for some time, and the extent and pace of future US interest rate cuts are subject to considerable uncertainty," HKMA added.

The U.S. central bank held interest rates steady on Wednesday and Federal Reserve Chair Jerome Powell said there would be no rush to cut them again until inflation and jobs data made it appropriate.

The decision and Powell's comments put Fed policy in a holding pattern at a time when the U.S. economic landscape seems both stable and wildly uncertain while awaiting further clarity on the impact of President Donald Trump's policies.

"In Hong Kong, our financial and monetary markets have continued to operate in a smooth and orderly manner," HKMA said, adding market liquidity has remained stable and the Hong Kong dollar exchange rate stays steady.

The public should manage the interest rate risk when purchasing property, taking out mortgages or making other borrowing decisions, HKMA said.

In 2024, the HKMA made three rate cuts, with the last trim by a quarter point in December.

(Reporting by Donny Kwok; Editing by Saad Sayeed)

((donny.kwok@thomsonreuters.com; +852 3462 7745;))

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