The Hong Kong Monetary Authority (HKMA) kept its base rate unchanged, following the lead of the US Federal Reserve, as the American central bank awaits data to assess the inflationary impact of Washington’s tariffs with the July 9 expiry of a truce.
On Thursday, the HKMA kept its base rate at 4.75 per cent, after the Fed left its target range at 4.25 to 4.5 per cent, following the fourth Federal Open Market Committee (FOMC) meeting of the year. The Fed has kept rates unchanged for four meetings in a row, despite pressure from US President Donald Trump to make cuts.
“Increases in tariffs this year are likely to push up prices and weigh on economic activity,” Fed chairman Jerome Powell said after the FOMC meeting. “This is something we know is coming, we just do not know the size of it.”
The Fed decision was in line with market expectations, with 99.9 per cent of traders expecting no change, according to data compiled by the CME Group that was based on Fed fund futures contracts on Wednesday.
“Current market pricing is for two Fed rate cuts this year on the assumption that US cyclical momentum slows given the impact of tariffs on US domestic demand,” said Michael Krautzberger, chief investment officer for public markets at Allianz Global Investors, in a research note on Monday.
