HKMA’s Response to US Fed’s Interest Rate Decision
The Federal Open Market Committee of the Federal Reserve (the Fed)
announced early today (Hong Kong time) after its two-day meeting that
it had decided to keep the target range for the federal funds rate
unchanged at 4. 25-4. 5%.
The policy decision is in line with
market expectations. However, the pace of future rate cuts remains
uncertain as it is dependent on US inflation and labour market data
developments, the effect of previous rate cuts, as well as the impact
of fiscal, economic and trade policies adopted by the new
administration on economic activity.
In Hong Kong, our
financial and monetary markets have continued to operate in a smooth
and orderly manner. Market liquidity condition has remained stable,
and the Hong Kong dollar exchange rate stays steady. Under the Linked
Exchange Rate System, Hong Kong dollar interbank rates generally track
the US dollar counterparts, while shorter-tenor interbank rates tend
to be also influenced by the supply and demand of Hong Kong dollar
funding in the local market such as seasonal effects as well as
capital market activities.
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. The public should carefully assess and continue to manage
the interest rate risk when making property purchase, mortgage or
other borrowing decisions. The HKMA will continue to closely monitor
market developments and maintain monetary and financial stability.
Hong Kong Monetary Authority 30 January 2025