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Hong Kong central bank raises policy rate after Fed hike

Tan KW
Publish date: Fri, 24 Mar 2023, 10:03 AM
Tan KW
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HONG KONG: The Hong Kong Monetary Authority (HKMA) has lifted its base rate charged through the overnight discount window by 25 basis points to 5.25%, hours after the US Federal Reserve (Fed) delivered a rate rise of the same margin.

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

“The Fed’s rate-hike decision is consistent with market expectation, but there will continue to be considerable uncertainties on the interest rate path in the United States,” HKMA said in a statement.

The Fed on Wednesday raised interest rates by a quarter of a percentage point, but indicated it was on the verge of pausing further increases in borrowing costs after the recent collapse of two US banks.

The Federal Open Market Committee policy statement also said the US banking system was “sound and resilient”.

The HKMA said: “Individual banks in the United States had exhibited financial health and liquidity problems recently, which might result in credit tightening.

“It is too soon to assess how much this will further affect economic activities and influence monetary policy.”

 - Reuters

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