The Hong Kong Monetary Authority (HKMA) kept its base rate unchanged in lockstep with the US Federal Reserve, after the American central bank said it needed more time and data to monitor the potential inflationary impact of President Donald Trump’s tariffs.
On Thursday, the HKMA maintained its rate at 4.75 per cent, hours after the Fed left its target range between 4.25 per cent and 4.5 per cent during the fifth Federal Open Market Committee (FOMC) meeting of the year. The Fed has stood pat on rates for five meetings in a row, defying Trump’s pressure to cut the cost of funds.
HSBC Holdings, Standard Chartered and Bank of China (Hong Kong) later said they would not change their prime rate and deposit rate. Commercial banks in the city decide when to change their rates and do not always follow the HKMA.
The HKMA said there were a number of variables guiding US interest rates.
“It would depend on the trend of the US inflation, employment data, alongside the implication of the tariffs and other fiscal policies to the economy,” the HKMA said in a statement on Thursday.
“There are many, many uncertainties left to resolve,” Fed chairman Jerome Powell said after the FOMC voted 9-2 in favour of keeping its target rate unchanged. “It doesn’t feel like we are very close to the end of that process.”