(Bloomberg) -- The Hong Kong Monetary Authority cut its benchmark interest rate, in line with the city’s currency peg to the dollar following the U.S. Federal Reserve’s reduction in borrowing costs.
The HKMA on Thursday lowered its base rate to 2.00% from 2.25%, hours after the Fed’s quarter-point cut, according to the institution’s page on Bloomberg. As the Hong Kong dollar is linked to the greenback, the territory essentially imports U.S. monetary policy.
The move is unlikely to have much bearing on the local cost of borrowing as lenders don’t necessarily pass on the rate to the public. Data due for release later Thursday is expected to confirm that the city’s economy entered a technical recession in the third quarter, with retail and tourism sectors battered by almost five months of anti-government protests.
“It is hard to say whether the Hong Kong interbank rates may follow the U.S. rate,” HKMA Chief Executive Eddie Yue said Thursday at a briefing. “However, the U.S. rate cut does reflect the downward pressure on the global economy, to which Hong Kong is not immune.”
(Updates with Yue’s comment in last paragraph.)
To contact Bloomberg News staff for this story: Jeffrey Black in Hong Kong at jblack25@bloomberg.net
To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, Dominic Lau
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