Hong Kong keeps base rate at 4.25% after Fed holds steady

The Hong Kong Monetary Authority kept its base interest rate unchanged at 4.25% on Thursday, matching the U.S. Federal Reserve’s decision to maintain rates.

Hong Kong’s monetary policy follows the United States because the city’s currency is pegged to the US dollar within a range of 7.75 to 7.85 per dollar. The Hong Kong dollar traded at 7.8452 per dollar.

The HKMA said in a statement that US interest rate changes face substantial uncertainty and will depend on inflation developments, labor market conditions, and other economic data. These factors may affect Hong Kong’s interest rate environment.

The authority added that the outlook for the Hong Kong dollar and interbank rates can shift due to various factors.

These include the market’s appetite for carry trades and supply-demand conditions for Hong Kong dollars, which are influenced by capital market activities and seasonal factors.