HKMA warns investors to be ready for US interest rate rises this year

Hong Kong Monetary Authority is warning bankers and investors to beware of the risks of a US rate rise later this year despite the Federal Reserve opting to keep interest rates flat on Wednesday.

Meanwhile currency traders believe a rate rise will not come before June.

“The US Federal Open Market Committee maintained interest rates unchanged at its meeting on Wednesday. The committee acknowledged that the US economy continued to progress towards the Fed’s policy objectives of maximum employment and price stability, bolstering the case for gradually raising interest rates this year,” according to a spokesman for the HKMA, the de facto central bank of Hong Kong.

“The gradual normalisation of US interest rates may have an impact on global capital flows, exchange rates and asset markets.

“We continue to remind banks, corporates and individuals to remain vigilant and manage risks prudently so as to cope with potential changes in capital flows and market volatility arising from future increases in US interest rates.”

The authority’s warning echoed that of Chan Ka-keung, the Secretary for Financial Services and the Treasury. He said the expected interest rate rise would be one of the major challenges faced by Hong Kong’s investment market this year.