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Hong Kong cuts rates after Fed move, but banks stand pat on funding pressure


REUTERS/Bobby Yip


Hong Kong’s central bank lowered its benchmark interest rate on Thursday, its first cut since late 2008, tracking a cut in U.S. rates, although tight cash conditions in the city kept banks from reducing borrowing costs.


The Hong Kong Monetary Authority keeps its policy in lock-step with the U.S. Federal Reserve as the city's currency HKD=D3 is pegged to the greenback in a range of 7.75-7.85 per dollar.


On Thursday, the HKMA cut the base rate it charges through its overnight discount window HKDR= by 25 basis points to 2.5%. The Fed cut rates on Wednesday for the first time since the global financial crisis, reflecting central banks’ bias towards easing policy amid slowing global economic growth and the protracted Sino-U.S. trade war.



Reuters

1st August 2019

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