By South China Morning Post | Created at 2024-10-07 00:22:41 | Updated at 2024-10-07 02:20:19
2 hours ago
HSBC, the city’s biggest lender, expects six more rate cuts in the US, which will considerably bring down the cost of funding and benefit the local economy and markets, according to its Hong Kong head.
The Federal Reserve, which cut its key rate by half a percentage point on September 18, will undertake another six cuts of 25 basis points at each of its meetings until June, with the next expected on November 7, according to HSBC Global Research. The Fed’s rate target range may drop to 3.25 to 3.50 per cent by next June.
HSBC was the first bank in Hong Kong to announce a 25-basis-point cut in its prime lending rate and savings deposit rate hours after the Fed decision. Other top local lenders followed suit, marking a rare move for domestic banks to immediately change their key rates along with the Hong Kong Monetary Authority, which moves in tandem with the Federal Reserve, in contrast to the previous practice of cutting rates some months later.
“The market considered our rate cut to be a surprise because of past behaviour,” Luanne Lim, CEO of HSBC Hong Kong, said in an interview on Friday.
She said HSBC had considered a rate cut ahead of the Fed meeting last month “based on the macro economy, the level of interbank rates, and our cost of funding”.
