HKMA cuts benchmark interest rate to 1.5%

It was in line with the US Fed’s cuts in response to the virus outbreak.

Bloomberg reported that the Hong Kong Monetary Authority (HKMA) cut its benchmark interest rate in line with the U.S. Federal Reserve. The HKMA lowered its base rate to 1.5% from 2% in step with the Fed’s move according to a “pre-set formula”.

The move is an automatic response to US Fed chairman Jerome Powell’s emergency 50 basis point reduction to counter the economic effects of the spreading coronavirus epidemic.

As the Hong Kong dollar is pegged to the greenback, the city essentially imports U.S. monetary policy. Local banks are not obliged to follow with lower borrowing costs, but the city’s battered economy after months of protests and now the virus outbreak prompted support.

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