Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Hong Kong's cenbank raises interest rate after Fed hike, HSBC keeps rate unchanged

Published 02/01/2023, 06:46 PM
Updated 02/02/2023, 03:31 AM
© Reuters. FILE PHOTO-Eddie Yue Wai-man, Chief Executive of the Hong Kong Monetary Authority (HKMA) poses for a picture during an interview with Reuters in Hong Kong, China November 4, 2022. REUTERS/Tyrone Siu

HONG KONG (Reuters) -The Hong Kong Monetary Authority (HKMA) raised its base rate charged through the overnight discount window by 25 basis points to 5.0% on Thursday, hours after the U.S. Federal Reserve delivered a rate hike of the same margin.

Hong Kong's monetary policy moves in lock-step with the United States as the city's currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar.

"Rate hikes in the U.S. will not affect the financial and monetary stability of Hong Kong," HKMA chief executive Eddie Yue told a media briefing, adding monetary and financial markets continue to operate in a smooth and orderly manner.

In announcing its latest policy decision, the U.S. central bank scaled back to a quarter-percentage-point rate increase after a year of larger hikes and Fed Chair Jerome Powell suggested a "couple" more hikes coming.

"The rate hike cycle in the U.S. has not yet completed, the Hong Kong dollar interbank rates might remain at elevated levels for some time," Yue said.

However, HSBC Holdings (NYSE:HSBC) said it was leaving its best lending rate in Hong Kong unchanged at 5.625%, despite a raise by the city's de facto central bank.

Hong Kong is facing risks from high inflationary pressure and aggressive monetary tightening in advanced economies. Higher borrowing costs and a pessimistic economic outlook have hit asset prices, dragging 2022 private home prices down 15.6% in the first annual drop since 2008.

© Reuters. FILE PHOTO-Eddie Yue Wai-man, Chief Executive of the Hong Kong Monetary Authority (HKMA) poses for a picture during an interview with Reuters in Hong Kong, China November 4, 2022. REUTERS/Tyrone Siu

Cases of negative equity in the city's residential mortgage loans jumped nearly 22 fold in the fourth quarter from the previous one, as home prices continued to fall during the period.

HKMA said the surge in negative equity mortgage cases was "controllable", urging the public to prepare for the likelihood that bank lending rates might go higher and that homebuyers should be prudent in making borrowing decisions.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.