The Hong Kong Monetary Authority (HKMA) on Thursday announced a policy rate raised by 75 basis points to 3.5%, the fifth consecutive hikes to stabilize its dollar-pegged currency.
The decision came after the US Federal Reserve raised its benchmark interest rate by 75 basis points on Wednesday to a range of 3-3.25% to combat soaring inflation.
Bloomberg wrote that investors are monitoring whether the commercial banks in Hong Kong will follow the central bank on raising borrowing costs, which could be their first since 2018. Commercial banks in Hong Kong have yet to raise rates in tandem with their central bank’s several hikes amid economic slowdown, caused by Covid-19 outbreak that led to Hong Kong’s authorities cutting its GDP forecast for the second time this year.
