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HSBC, Standard Chartered keep their prime rates unchanged after HKMA, Fed hold fire
The Fed is seen cutting rates again by midyear, while Hong Kong banks may lower their prime rates by 0.125 percentage points
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Hong Kong’s de facto central bank kept its key interest rate unchanged in lockstep with the US Federal Reserve, as policymakers push any cuts back to later this year while they study the potential inflationary impact of President Donald Trump’s tariffs.
The Hong Kong Monetary Authority (HKMA) kept its base rate at 4.75 per cent on Thursday, prompting HSBC and its subsidiary Hang Seng Bank, Standard Chartered Plc, Bank of China (Hong Kong) to maintain their prime rates. Hours earlier, the Fed left its target rate in the 4.25 to 4.5 per cent range, following the second Federal Open Market Committee (FOMC) meeting of the year.
The HKMA last cut the city’s base rate to 4.75 per cent from 5 per cent in December, the lowest level since December 2022.
The policy decision by FOMC is in line with market expectations, according to a statement issued by the HKMA on Thursday morning. Under a currency peg known as the Linked Exchange Rate System, Hong Kong’s monetary policy has moved in lockstep with Fed policy since 1983.
“Interest rates in Hong Kong might still remain at relatively high levels for some time, and the extent and pace of future US interest rate cuts are subject to considerable uncertainty,” the HKMA said.
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