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Hong Kong maintains interest rates following US Federal Reserve's decision

EditorPollock Mondal
Published 21-09-2023, 11:58 am

The Hong Kong Monetary Authority (HKMA) announced on Thursday its decision to maintain the current base rate through the overnight discount window at 5.75%. This move follows the US Federal Reserve's decision to hold its interest rates steady.

Earlier this week, the US central bank concluded a two-day policy meeting where it decided to keep interest rates unchanged. Despite maintaining the status quo, the bank indicated a potential rate hike before year-end and projected a tighter monetary policy through 2024 than previously anticipated.

The HKMA's decision is closely linked to the monetary policy of the United States as Hong Kong's currency is pegged to the US dollar. The exchange rate is sustained within a narrow band of 7.75-7.85 per dollar.

In its announcement, the HKMA noted that it would be premature to conclude whether the US has ended its cycle of rate hikes, suggesting that a high-interest-rate environment could persist for some time.

According to HKMA, Hong Kong's financial and monetary markets are operating smoothly and in an orderly fashion. It further stated that the exchange rate of the Hong Kong dollar remains stable. The interbank rates for the Hong Kong dollar are also expected to remain high for a foreseeable period.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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