Hong Kong Interest Rates Likely to Stay High Amid US Rate Uncertainty

The Hong Kong Monetary Authority followed the U.S. Federal Reserve's decision to maintain stable interest rates by keeping its base rate at 4.75 percent. With the city's currency fixed to the US dollar within a narrow band of 7.75–7.85 per dollar, Hong Kong's monetary policy follows the US closely.

"Interest rates in Hong Kong might still remain at relatively high levels for some time, and the extent and pace of future US interest rate cuts are subject to considerable uncertainty," HKMA said.

Federal Reserve Chair Jerome Powell stated that the U.S. central bank would not be in a rush to lower interest rates again until inflation and employment data warranted it on Wednesday.

While waiting for more information on the effects of President Donald Trump's initiatives, the decision and Powell's remarks put Fed policy in a holding pattern at a time when the US economy appears to be both stable and extremely uncertain. The HKMA stated that "in Hong Kong, our financial and monetary markets have continued to operate in a smooth and orderly manner," noting that market liquidity and the value of the Hong Kong dollar have remained unchanged.

When buying real estate, getting a mortgage, or making other borrowing decisions, the public should control the interest rate risk, according to the HKMA. The HKMA lowered interest rates three times in 2024, the most recent being a quarter point in December.