Hong Kong's monetary authority kept its key interest rate unchanged in lockstep with the US Federal Reserve, taking a breather after last year's three cuts, in the first monetary policy decision of 2025.
The Hong Kong Monetary Authority (HKMA) maintained its base rate at 4.75 per cent on Thursday, in line with market expectations. Hours earlier, the Fed left its target rate in the range of 4.25 to 4.5 per cent, following the first Federal Open Market Committee (FOMC) meeting of the year.
The HKMA last cut the city's base rate by a quarter point to 4.75 per cent in December, the lowest level in two years.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
The Fed's decision was widely expected, as 97 per cent of traders anticipated no change to the interest rate, according to data compiled by the CME Group, based on Fed fund futures contracts on Tuesday.
Federal Reserve chair Jerome Powell speaks in Washington on December 18, 2024. Photo: Reuters alt=Federal Reserve chair Jerome Powell speaks in Washington on December 18, 2024. Photo: Reuters>
"With our policy stance significantly less restrictive than it had been, and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance", Fed chairman Jerome Powell said after the FOMC meeting.
The Fed's decision ignored the January 23 demand by President Donald Trump for the US central bank to lower interest rates.
"I will demand that interest rates drop immediately", Trump said in a speech from the White House to the World Economic Forum in Davos, Switzerland. "And likewise, they should be dropping all over the world. Interest rates should follow us all over."
The world's most powerful central bank is mandated to make decisions about monetary policy independently, free from political compulsion.
"The complex mix of rising inflation risks and substantial US budget deficit lead the Fed to maintain a steady rate stance, resisting President Trump's pressure for cuts," said Stephen Innes, managing partner at SPI Asset Management, a foreign exchange and commodity advisory firm, ahead of the FOMC meeting.
Innes said he expects two rate cuts this year, with the first taking place in June. "While this scenario may bolster the US dollar, it's not ideal for stocks", he added.