Hong Kong cuts benchmark interest rate, following Fed's move

HONG KONG (BLOOMBERG) – The Hong Kong Monetary Authority (HKMA) reduced its benchmark interest rate, following the Federal Reserve’s move.

The HKMA on Monday (March 16) lowered its base rate by 64 basis points to 0.86 per cent, hours after the Fed’s 100 basis points cut, according to the institution’s page on Bloomberg. This was the second rate reduction this month by both monetary authorities.

Hong Kong essentially imports US monetary policy as the local dollar is linked to the greenback. Central banks worldwide are stepping up monetary stimulus to counter the effects of the coronavirus.

The Fed will keep interest rates near zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals”, the Federal Open Market Committee said in a statement.

Hong Kong’s banks aren’t obliged to follow with lower borrowing costs, though any support would likely be welcomed by local businesses.

The city’s economy has been battered by months of unrest and the virus outbreak, while the local equity benchmark entered a bear market on Friday.

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