By South China Morning Post | Created at 2024-12-18 23:31:34 | Updated at 2024-12-19 02:58:33
3 hours ago
Hong Kong’s de facto central bank cut interest rates for the third time this year in line with the overnight move by the US Federal Reserve, lowering the cost of funds to ease the burden on mortgage borrowers and companies.
The Hong Kong Monetary Authority (HKMA) cut its base rate by a quarter of a percentage point to 4.75 per cent, the lowest level since December 2022.
Hours earlier, the Fed said it would maintain its target rate in the range of 4.25 to 4.75 per cent. However, optimism with the widely-expected cut was soon punctured by the Fed’s unexpectedly hawkish forecast of only two more reductions in 2025.
The surprise sent Wall Street reeling in late trading. The Dow Jones Industrial Average tumbled by more than 1,100 points, or 2.5 per cent, while the Nasdaq composite plunged by about 3.5 per cent after the downbeat forecast.
“A slower pace of (rate) cuts really reflects both the higher inflation readings we have had this year and the expectations that inflation will be higher” in 2025, Fed Chairman Jerome Powell after the final meeting of the Federal Open Market Committee (FOMC) for this year. “We are closer to the neutral rate, which is another reason to be cautious about further moves.”
The HKMA has cut the base rate by a full percentage point since September, with analysts expecting the cycle to continue next year that could help reboot businesses and the property market.
