Remarks after the US Fed FOMC Meeting

(Abridged version)

The Federal Open Market Committee of the Federal Reserve (the Fed) has decided to cut the federal funds rate by 25 basis points.  The HKMA has reduced the Base Rate by the same amount according to the established mechanism with immediate effect. 

The rate cut decision is in line with market expectations.  However, the pace of future rate cuts remains quite uncertain.  The renewed tariff uncertainties and the unavailability of certain major economic data have added complexity to the assessment of US labour market and inflation trends.

Hong Kong’s monetary and financial markets have continued to operate in an orderly manner.  On Hong Kong dollar deposit and lending rates, banks will normally take into account factors such as funding supply and demand, the level of interbank rates, and their own funding cost structures to assess the merit and extent of adjustments. 

The extent and pace of future US interest rate cuts are subject to uncertainty, which may influence the interest rate environment in Hong Kong.  The public should carefully manage interest rate risks when making financial decisions.  The HKMA will continue to closely monitor market developments and maintain monetary and financial stability.