Hong Kong slashes interest rate after US Fed’s second emergency cut, as Covid-19 pandemic gathers pace and roils global economies
- US Federal Reserve lowered interest rate to near zero on Sunday and resumed its quantitative buying programme, days ahead of its scheduled meeting, to bolster the US economy against the impact of the spreading coronavirus outbreak
- Hong Kong Monetary Authority (HKMA) lowered its base rate to 0.86 per cent, smaller than the US Fed’s 100-point cut
The Hong Kong Monetary Authority (HKMA) reduced its rate by 64 basis points to 0.86 per cent, less than the US Fed’s full percentage point cut. The US central bank cut rates by a total of 1.5 percentage point in two emergency moves since March 4, well ahead of its regular open-market committee meeting scheduled for March 18.
The US Fed slashed its rate on Sunday to between 0 and 0.25 per cent, from a range of 1 to 1.25 per cent, matching its previous record-low.
The HKMA also cut the countercyclical capital buffer (CCyB) from 2 per cent to 1 per cent with immediate effect, which releases HK$500 billion (US$64 billion) into the economy, said HKMA chief executive Eddie Yue Wai-man. He added that the HKMA can cut the CCyB to zero if needed.
“Hong Kong is falling into a recession as we see shop closures and job losses,” said Thomas Lam, head of valuation and advisory at International property consultant Knight Frank. “All these factors will hit consumer purchasing power, including home buying. These rate cuts could soften the blow to the property market.”