HSBC leads Hong Kong banks in keeping prime rates steady after city holds fire in tandem with the Federal Reserve

Fed chair Jerome Powell said the US central bank will start cutting rates well before it hits the 2 per cent inflation goal

Some analysts believe the Fed has reached its peak rate level, though it is unlikely to lower rates until the second half of next year

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Pedestrians on a footbridge in Hong Kong on Monday, April 24, 2023. Photo: Bloomberg

Published: 7:10am, 14 Dec 2023Updated: 5:04pm, 14 Dec 2023

HSBC led Hong Kong’s banks in keeping their prime rates steady, after the city’s monetary authority took a break from raising interest rates in lockstep with the US Federal Reserve, sparing businesses and homeowners higher borrowing costs.

HSBC and its subsidiary Hang Seng Bank said they would keep their prime rates unchanged at 5.875 per cent. Bank of China (Hong Kong), one of the city’s three note-issuing banks, said it too would keep the rate it offers its best customers unchanged at 5.875 per cent. Standard Chartered kept its prime rate unchanged at 6.125 per cent.

The Hong Kong Monetary Authority (HKMA) maintained its base rate at 5.75 per cent on Thursday. Hours earlier, the Fed left its target rate in the 5.25 per cent to 5.5 per cent range after the Federal Open Market Committee’s last meeting this year.

It was the fourth pause since the Fed began its rate-hike cycle in March 2022. The HKMA has followed the Fed in lockstep since 1983 on interest rates policy by design under its linked exchange rate system to preserve the local currency peg to the US dollar.

Fed chairman Jerome Powell prepares to deliver remarks to the Federal Reserve’s Division of Research and Statistics Centennial Conference on November 8, 2023, in Washington. Photo: Getty Images/TNS

Chairman Jerome Powell said the Fed will start cutting rates well before it hits the inflation goal.