Hong Kong Macau Cut Interest Rates 25bps Following U.S. Fed Move

The Hong Kong Monetary Authority (HKMA) lowered its base interest rate by 25 basis points to 4.25%, mirroring the U.S. Federal Reserve's recent quarter-point cut to a 3.75%-4.00% range. This marks HKMA's second rate reduction in 2025, aimed at supporting Hong Kong's economy, property market, and employment by lowering borrowing costs. Major banks, including HSBC and Bank of China (Hong Kong), have followed suit by reducing their prime lending rates. The HKMA's policy closely tracks the U.S. Fed due to Hong Kong's currency peg to the U.S. dollar within a narrow band, ensuring exchange rate stability. Despite this coordinated easing, uncertainty remains about future rate directions as the Fed faces data gaps caused by a U.S. federal government shutdown, prompting caution in forthcoming monetary decisions. Similarly, Macau's Monetary Authority also cut its base rate by 25 basis points to 4.50%, reflecting a regional trend of monetary easing despite inflation and economic growth dynamics.