After US Federal Reserve announces Fed cut rates by 50 bps, Hong Kong’s Monetary Authority cut base interest rates by 0.5% to 5.25%, which is considered to be the highest level since 2007. The move comes in to ease borrowing rates in the region’s economy.
Hong Kong’s decision came after Fed decided to cut rates by 5% to 4.75%-5% on Wednesday.
Apart from this, traders are also expecting further rate cuts of another 70 basis points rate reductions at the Fed’s two remaining meetings this year. However, the expectations stand thin chances of coming to effect, especially as Jerome Powell shared in the press release that further 50 bps can’t be thought of as “the new pace” for further rate cuts, as it all depends on the data.
As mentioned above, the rate cut in Hong Kong will relieve borrowing situations for businesses and consumers, who have seen years of high borrowing costs, slowing economic growth and the difficult real estate market.
Note that even though Hong Kong follows the suit of US Fed rate cut, other Asian central banks might not do so, as they focus more on financial stability and data. As the week from 16 September – 21 September gears up for major financial announcements, the Bank of Japan is yet to decide on its own borrowing costs on Friday.
Also Read: US Announces the Fed Cut Rate by 50 Bps to 4.75% -5%
