HKMA cuts rate by 25bp after Fed easing

Hong Kong

Hong Kong’s de facto central bank cut the city’s base lending rate by 25 basis points to 2.5% on August 1, following the Federal Reserve’s easing decision on the previous day.

The action was the monetary authority’s first rate cut since the 2008 global financial crisis. Hong Kong tends to follow Fed rate cuts to avoid putting excessive pressure on its Hong Kong dollar to US dollar peg.

“The US rate cut shows that the Federal Reserve has reversed its interest rate normalisation process that

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