HONG KONG (Reuters) -The Hong Kong Monetary Authority (HKMA) on Thursday raised its base rate charged through the overnight discount window by 50 basis points to 4.75%, hours after the U.S. Federal Reserve delivered a rate hike of the same margin.
The U.S. central bank raised interest rates by half a percentage point and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023, as well as a rise in unemployment and a near-stalling of economic growth.
“Rate hike in the U.S. will not affect the financial and monetary stability of Hong Kong,” HKMA Chief Executive Eddie Yue told reporters. “Our monetary and financial market continue to operate in a smooth and orderly manner. The Linked Exchange rate system (LERS) also continues to work well.”
Hong Kong’s monetary policy moves in lock-step with the United States’ as the city’s currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar.
The market generally expects the U.S. dollar interest rate to continue to rise and together with increase Hong Kong dollar funding demand driven by seasonal and the local stock market, the Hong Kong dollar interbank rates might remain at elevated level for some time, HKMA said.
(Reporting by Donny Kwok and Twinnie Siu; Editing by Leslie Adler and Stephen Coates)
