HKMA Boosts Base Rate as Hong Kong Banks Hold Lending Rates Steady

The Hong Kong Monetary Authority (HKMA) raised its base interest rate by 25 basis points to 4.25% on Thursday, following the US Federal Reserve’s decision to increase borrowing costs due to concerns over inflation.

This marks the first increase in Hong Kong's base rate since July 2023 and underscores the constraints imposed by the city’s currency peg to the US dollar.

Hong Kong's monetary system requires the HKMA to closely track US interest-rate movements because the Hong Kong dollar is maintained within a narrow trading band of 7.75 to 7.85 per US dollar.

The major banks in Hong Kong, including HSBC and Standard Chartered, have left their best lending rates unchanged at 5% and 5.25%, respectively.