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THE president of the Hong Kong Foreign Exchange Association, Tam Ping-shing, believes that the Fed has set a clear policy by the rate cut.
'It [the Fed] believes that the economy is not bad but is weaker than what it was in early 1994 despite the relatively mixed signals coming out of the economic figures recently,' he said.
'So the small cut reflects the Fed's neutral stand over the economy's performance. That's why it lowered the Fed fund rate and not the discount rate.
'For Hong Kong, the rates of the liquidity adjustment facility (LAF) have played an important indicative role for Hong Kong's interest rate structure. As the LAF rates remained unchanged, I doubt Hong Kong will see a rate cut on Friday.'
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