On March 19, the U.S. Federal Reserve System (Fed) announced its decision to maintain the federal funds rate target range at 4.25% to 4.5%. The accompanying dot plot indicates that the Fed may reduce rates by a total of 50 basis points later this year.
In response, the Hong Kong Monetary Authority (HKMA) stated on March 20 that the Fed's decision aligns with market expectations. They noted that interest rates in Hong Kong are likely to remain elevated for the foreseeable future. The HKMA also cautioned that the pace of potential rate cuts in the U.S. remains uncertain, urging residents to carefully consider and manage interest rate risks when making property and mortgage decisions.
The HKMA pointed out that recent changes in various economic data and fluctuations in market expectations contribute to the uncertainty surrounding future rate cuts, which depend on trends in U.S. inflation and employment data, as well as the impacts of U.S. fiscal and trade policies on economic activity.
In Hong Kong, the financial and monetary markets are functioning smoothly, with stable liquidity and a stable Hong Kong dollar exchange rate. The Hong Kong interbank offered rate generally aligns with U.S. interest rates under the linked exchange rate system, while shorter-term rates are influenced by local supply and demand dynamics, including seasonal factors and capital market activities.
The HKMA stressed that interest rates in Hong Kong are expected to remain high for some time, and the magnitude and pace of potential U.S. rate cuts carry significant uncertainty. Residents are advised to carefully consider and manage interest rate risks when making decisions about property purchases, mortgages, or other borrowing. The HKMA will continue to closely monitor market changes to maintain monetary and financial stability.
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