Chan Ka-keung calms fears of higher rates after cut in Fed bond purchases
Secretary for financial services says the US central bank would have to wait until year end before deciding next move despite cut in bond buying
Homeowners do not have to worry about a sudden surge in interest rates, which would further hit an already ailing property market after the United States Federal Reserve's move to further reduce its bond-buying programme, a minister said yesterday.
"The Federal Reserve has always indicated it would not increase interest rates in the near term. This is the message it gives to the market. This is why global markets remain calm," Chan Ka-keung, the secretary for financial services and the treasury, said at the sidelines of a conference.
"The Fed would need to wait until the end of this year or early next year to assess data about inflationary pressures and other factors before it decides its next step forward," Chan said.
What the Fed is doing is within our expectation. This is [its] exit strategy
The Hong Kong dollar is pegged to the US dollar so the city's interest rates follow those of the US.
The Fed on Wednesday continued with the phasing out of its stimulus programme by cutting its monthly bond purchases by another US$10 billion.
The Fed has been winding down its bond buying since January and most markets have been mulling when it would begin raising interest rates as the economic recovery takes hold.
The low interest rate environment has led to hot money flowing into stocks or overseas markets such as Hong Kong. Winding down the policy could reverse the capital flows.