HKMA cautions market on interest-rate risks as Fed signals policy easing ‘as soon as’ September
- HSBC and BOCHK among five lenders that have maintained their prime rate after the HKMA kept its base rate at 5.75 per cent in lockstep with the Fed’s decision
Hong Kong’s de facto central bank has cautioned the public to be vigilant about interest-rate risks as traders speculated the US Federal Reserve will start cutting its key policy rate from next month, saying the outcome or trajectory is far from certain.
“Based on the Fed’s public communication, a rate cut might happen as soon as the meeting in September,” the Hong Kong Monetary Authority said in a statement. “Yet, it remains uncertain whether the pace of easing will follow market expectation. The public should carefully assess and manage the relevant risks when making property purchase, mortgage or other borrowing decisions.”
The caution came after the HKMA kept its base rate unchanged at 5.75 per cent early on Thursday. Hours earlier, the Fed maintained its target rate in the range of 5.25 per cent to 5.5 per cent after concluding its fourth rate-setting committee meeting this year.
HSBC, its subsidiary Hang Seng Bank, and Bank of China (Hong Kong), maintained their prime rate at 5.875 per cent, while paying 0.875 per cent per annum on savings deposits of more than HK$5,000 (US$640) and nothing on deposits below the threshold, the three banks said in separate statements.
Standard Chartered and Citibank kept their lending rates at 6.125 per cent.
While the Fed made no move this time, chairman Jerome Powell signalled a shift in favour of policy easing as early as the Fed’s open-market committee meeting on September 18, as widely expected by market participants.