Remarks after FOMC Meeting

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31 Oct 2019

Remarks after FOMC Meeting

Eddie Yue, Chief Executive, Hong Kong Monetary Authority

  1. The US Fed decided to cut its policy rate by 25 basis points last night.  This morning the HKMA also adjusted downward the Base Rate for the Discount Window by 25 basis points to 2%.
  2. The Fed’s rate-cut decision was expected by the market, but I think the interest rate outlook is still uncertain.
  3. Back to Hong Kong, our foreign exchange and money markets have continued to operate smoothly, and the Hong Kong dollar exchange rate also remains stable.
  4. It is hard to say whether the Hong Kong dollar interbank rates may follow the US rates to go lower, because they are also affected by local factors that may affect the demand for Hong Kong dollars including, for example, IPO activities in Hong Kong. However, the US rate cut reflects downward pressure on the global economy, to which Hong Kong is not immune.  The effect especially on SMEs has increased. Therefore the HKMA, HKMC and the banking sector have recently rolled out targeted measures to relieve stress faced by the SMEs.
  5. The global financial and economic environment is going through a very challenging time with various uncertainties.  I would therefore like to remind the public to manage your financial risks in a prudent way.
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Last revision date : 31 October 2019