HSBC, major lenders keep prime rates unchanged after HKMA maintains base rate at 5.75%, giving Hong Kong businesses, homeowners relief

Name: HKMA to mark 30th anniversary with global financial heavyweights summit, says CEO Eddie Yue
Uploaded: 2023-11-01T23:01:36.000Z
Duration: 9 min 7 s
Description: HKMA to mark 30th anniversary with global financial heavyweights summit, says CEO Eddie Yue

HKMA’s rate pause is the third in the current hiking cycle that began in March 2022; possibility of future increases in 2023 remains a close call

HSBC, Hang Seng, BOCHK and Standard Chartered, all kept their prime rates steady on Thursday

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A delivery worker pulls pallets up a street in the rain in Hong Kong on October 18, 2023. (Photo by Peter PARKS / AFP)

Enoch Yiu

Published: 7:01am, 2 Nov 2023Updated: 5:31pm, 2 Nov 2023

Hong Kong’s monetary authority kept its key interest rate unchanged in lockstep with the “dovish pivot” by the US Federal Reserve, sparing the city’s businesses and homeowners from higher borrowing costs while the economy regains strength.

HSBC and its subsidiary Hang Seng Bank, as well as Bank of China (Hong Kong), all kept their prime rates steady at 5.875 per cent, while Standard Chartered also retained its prime rate at 6.125 per cent, according to separate statements from the banks on Thursday.

These lenders’ decision came after Hong Kong Monetary Authority (HKMA) maintained its base rate at 5.75 per cent on Thursday, according to statement from the de facto central bank. Hours earlier, the Fed left its target rate in the 5.25 per cent to 5.5 per cent range in what the market called a “dovish pivot.” It was the third pause since the Fed began its rate-hike cycle in March 2022.

The HKMA follows 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.

The latest decision, though expected by traders, still comes as a much-needed relief for Hong Kong’s businesses and mortgage borrowers. A government report this week showed Hong Kong’s economy barely grew sequentially by 0.1 per cent last quarter, after a 1.3 per cent contraction in the preceding three months.

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HKMA to mark 30th anniversary with global financial heavyweights summit, says CEO Eddie Yue

“The pause will only be a temporary respite for borrowers and companies because interest rates have already climbed to a high level,” said Edmund Wong Chun-sek, who represents the accountancy constituency in the local Legislative Council. “The government will need to take more measures to stimulate the economic recovery.”