HKMA raises rate for first time in three years
HSBC and StanChart says that they would keep their best lending rates in Hong Kong unchanged
On September 17, the Hong Kong Monetary Authority (HKMA) increased its base interest rate by 25 basis points to 4.25 percent, in sync with the US Federal Reserve's decision to raise rates for the first time in three years. This move occurred in a tight range between 7.75 and 7.85 Hong Kong dollars per US dollar. The HKMA's decision was based on concerns about inflation and market expectations.
HSBC and StanChart, two major banks, announced that they would maintain their best lending rates in Hong Kong at 5 percent and 5.25 percent, respectively. Bank of China (Hong Kong) also stated that its Hong Kong dollar prime rate would remain unchanged at 5 percent. All three banks chose not to disclose the rationale behind their decisions.
The HKMA's chief executive, Eddie Yue, explained that the widening interest rate differential between the Hong Kong dollar and the US dollar might lead to carry trade activities, potentially causing the Hong Kong dollar to weaken towards the lower end of its exchange rate band.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
