Hong Kong's de facto central bank on Friday cut its policy base rate 0.25% to 5.00%, moving in lock-step with the decision on Thursday by the US Federal Reserve to cut its key rate by the same amount.
Unlike many other central banks, the Hong Kong Monetary Authority (HKMA) does not target inflation rates, but rather the foreign exchange rate of the Hong Kong dollar.
Although Hong Kong was ceded by the UK and became a special administrative region of mainland China in 1997, it retained its own currency and monetary authority.
The HKMA pegs the Hong Kong dollar to a range of 7.75 to 7.85 to the US dollar.
"Our financial and monetary markets have continued to operate in a smooth and orderly manner. Market liquidity condition has remained stable, and the Hong Kong dollar exchange rate stays steady," the HKMA said in a prepared statement accompanying the rate cut.
Interest rates may come down only slowly in the future, warned the HKMA. "The rate-cut cycle in the US is still at its initial stage. Interest rates might still remain at relatively high levels for some time. The public should carefully assess and continue to manage the interest rate risk when making property purchase, mortgage or other borrowing decisions," said the central bank.
Hong Kong's gross domestic product will expand by between 2.5% and 3.5% on year in 2024, according to a mid-August government estimate.
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