Hong Kong central bank keeps key rate unchanged, tracks Fed decision

HONG KONG, May 2 (Reuters) – The Hong Kong Monetary Authority (HKMA) kept its base rate charged through the overnight discount window unchanged at 5.75% on Thursday, tracking a decision by the U.S. Federal Reserve to keep rates steady.

The U.S. Federal Reserve held interest rates steady on Wednesday and signalled it was still leaning towards eventual reductions in borrowing costs, but flagged recent disappointing inflation readings that could delay the rate cuts.

“The high interest rate environment may last for some time,” HKMA said, opens new tab in a statement, adding the Fed has not yet gained enough confidence about the U.S. inflation trajectory to start cutting interest rates.

Hong Kong’s financial and monetary markets continue to operate in a smooth and orderly manner, the Hong Kong dollar exchange rate remains stable while Hong Kong dollar interbank rates might remain high for some time, HKMA said.

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

HSBC Holdings said it kept its best lending rate in Hong Kong unchanged at 5.875%.

Source: REUTER