The Hong Kong Monetary Authority (HKMA) kept its base rate steady at 4.75% on January 30, following the US Federal Reserve's decision to maintain borrowing costs, a move widely anticipated after three rate cuts in 2024.
HKMA keeps rates steady amid economic strain
The decision aligned with US monetary policy because the Hong Kong dollar was pegged to the US dollar. The HKMA had last reduced interest rates by 25 basis points in December.
In its statement, the central bank noted that interest rates in Hong Kong may remain elevated for a prolonged period. It emphasized that the pace and extent of US rate cuts' future remain uncertain. The HKMA also advised the public to carefully evaluate and manage interest rate risks when making property purchases, mortgages, or other borrowing decisions.
Hong Kong GDP slows to 1.8% amid rate pressure
High interest rates have placed significant pressure on the local economy. Hong Kong’s GDP grew 1.8% in Q3 2024, the slowest pace in five quarters, as private consumption declined and goods exports moderated.
