This was the first time the Hong Kong Monetary Authority (HMKA) reduced its base interest rates in the last four years after the Federal Reserve eased its monetary policy. Hong Kong’s interest rate fell by 50 basis points to 5.25% from the all-time high since 2007.
HMKA Deputy Chief Executive Howard Lee states, “ 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.” He further stated, “The rate cut cycle has just begun, interest rates will remain at relatively high level in the foreseeable future. The public should carefully access and continue to manage the interest rate risk when making property purchase, mortgage or other lending decision.”
This interest cut from HMKA will relieve businesses and consumers who have been facing steep borrowing costs for years. That’s also been one of the biggest drags on economic growth and the real estate market, where prices have fallen to the lowest since 2016.
Interest rate cuts from the Federal Reserve generally start a cycle of global rate cuts, but this is not likely to spur an immediate reaction throughout Asian nations. Regulators of the region, like Japan, focus more on financial stability and are expected to keep borrowing costs unchanged.
