HKMA follows Fed with interest rate hike
Chief executive says HKMA will intervene when currency hits lower bound of peg
The Hong Kong Monetary Authority increased its base lending rate by 50 basis points to 1.25% on May 5, after the US Federal Reserve raised the federal funds rate by 50bp the day before.
The Hong Kong dollar is pegged to the US dollar in a narrow band of 7.75 to 7.85. The HKMA sets its policy rate in accordance with the US federal funds rate. In March, HKMA increased its benchmark interest rate by 25bp to 0.75% for the first time since 2018, in step with the Fed.
“Looking ahead, the US may need
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