HKMA Keeps Base Rate at 4% Following US Fed Decision
On Thursday, the Hong Kong Monetary Authority (HKMA) maintained its base rate at 4% following the US Federal Reserve's decision to keep its key rate unchanged.
The HKMA made this move just hours after the Fed concluded its fifth Federal Open Market Committee meeting of the year, retaining its target rate in the range of 3.5% to 3.75%. The decision was widely expected, with 67.9% of traders forecasting no change.
The US stock market slumped on Wednesday, with the Dow Jones down 1,152 points or 2.2%, the S&P 500 falling 1.5%, and the Nasdaq dropping 1.7%. The decline came after the bond market signaled that the Fed might be lagging behind in its fight against inflation.
'For some households, businesses, and market professionals, five years of high inflation have left a mistaken impression that is hard to shake, that the Fed's implicit inflation target was somehow above 2 per cent,' said Kevin Warsh, Fed chairman. 'Let me reiterate: there is no soft inflation target. There is no soft implicit target, not on this committee's watch. There's only a target, and it's 2%.'
No hike at this moment is slightly positive for Hong Kong's real estate and stock market,' said Tommy Ong, managing director of T.O. & Associates Consultancy. 'However, the magnitude of the price rise will be limited because the next US inflation readings are very uncertain.'