Hong Kong cuts policy rate 25 basis points, following Fed

ISTANBUL

Hong Kong Monetary Authority (HKMA) cut its benchmark interest rate by 25 basis points on Thursday following the US Federal Reserve's decision to lower its policy interest rate, due to its exchange rate regime pegged to the US dollar.

The base rate was lowered to 4% from 4.25%, the HKMA said in a statement.

The central bank followed the Fed's interest rate cut decision, and major Hong Kong commercial banks HSBC, Standard Chartered, and Bank of China (Hong Kong) are also expected to cut their lending rates.

This rate cut marks the HKMA's third cut this year, mirroring the Fed's actions. The Fed previously cut its policy rate by 25 basis points in September and October, with the HKMA implementing similar cuts.

On Wednesday, the Fed lowered its policy rate by 25 basis points to a range of 3.5% - 3.75%, due to the slowing labor market in the US.

Since the Hong Kong dollar was pegged to the US dollar in 1983, the region has followed the Fed's monetary policy actions.