Hong Kong follows US Fed’s 25 basis point rate cut, just in time for city’s stalling economy and kickoff of Budweiser’s mega IPO

Hong Kong’s monetary authority cut its base lending rate for the second time this year in lockstep with the US Federal Reserve’s widely expected move overnight, reducing the cost of money just as a slowing local economy teeters on the brink of a technical recession.

The city’s de facto central bank reduced the base lending rate by 25 basis points to 2.25 per cent effective immediately, matching a similar cut by the US Fed.

All three note-issuing banks, HSBC, Bank of China Hong Kong and Standard Chartered Bank, as well as Hang Seng Bank kept their prime lending rate unchanged at between 5.125 per cent and 5.375 per cent.

Sammy Po Siu-ming, chief executive of Midland Realty’s residential division, said that even though banks were yet to lower their rates, the interest-rate environment remains benign for the property market that has seen used home prices drop by 1.8 per cent between end-July and September 8.

“The interest rate cut will benefit the capital markets and economic activities in Hong Kong, “ Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, said in a media briefing after the rate cut.

“The global economy is on a downward trend as a result of the trade war between China and the US. The local social unrest has hit hard tourism, retail and restaurant businesses. The HKMA and banks will work together with the government to help (small and medium enterprises) cope with the challenging time,” he said, referring to earlier announced measures to ensure businesses have funds to stay afloat.