Norman T.L. Chan, Chief Executive, Hong Kong Monetary Authority
While the US FOMC, as the market widely expected, kept its monetary policy unchanged at yesterday’s meeting, it noted that it expected to begin the reduction of the Fed’s balance sheet relatively soon.
Although the probability of a FOMC rate hike by year-end as implied by the futures market has declined to around 40%, we have to point out that the pace of US interest rate increase and the starting time of the Fed’s balance sheet reduction remain uncertain. We remind banks, corporates and individuals to manage risks prudently so as to cope with potential changes in capital flows and market volatility arising from the normalisation of US monetary policy.