Hong Kong Monetary Authority Raises Base Rate Following US Federal Reserve's Interest Rate Hike

The Hong Kong Monetary Authority (HKMA) has increased its Base Rate by 25 basis points to 4.25% with immediate effect, following the US Federal Reserve's decision to raise the federal funds rate target range to 3.75%-4.00%. The Fed's move, its first rate hike since July 2023, was a unanimous decision reflecting concerns over elevated inflation despite solid economic activity and a stable labor market. The HKMA noted that the widening HKD-USD interest rate differential may lead to a gradual easing of the Hong Kong dollar.