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RTHK
6 hours ago
- Business
- RTHK
No plans to end HK's US dollar peg: CE
No plans to end HK's US dollar peg: CE The CE says firms should consider the national interest when pursuing commercial deals. Photo courtesy of SCMP. Chief Executive John Lee says there are no plans to change the city's US dollar peg. The Hong Kong dollar has been pegged to the US dollar since 1983 under the Linked Exchange Rate System. The Hong Kong Monetary Authority recently intervened heavily to defend the exchange rate as strong capital inflows, particularly from the mainland, pushed the Hong Kong dollar to the strong end of its trading band. In an interview with the South China Morning Post published on Monday, the CE said the peg is a cornerstone of Hong Kong's financial success and provides stability, especially during turbulent times. But he also said the SAR will not solely rely on the peg and will strengthen its position as the premier offshore renminbi hub, to create more trade. Currently, about 80 percent of offshore renminbi payments are processed through Hong Kong, the CE said. Lee also called on firms to consider the national interest when pursuing commercial deals. In March, local conglomerate CK Hutchison was embroiled in controversy over its plans to sell its Panama ports to a consortium led by a US investment firm. The CE used a metaphor to say that no one should harm the interests of the rest of the family. 'I can't find the logic that you, being a family member, can act against the interests of your family,' he said. 'The family allows you to pursue your best interests. You can be a reporter, you can be a singer. The family allows you to do it. But you don't come back home and destroy all the furniture, right? That can't be reconciled. I think that's simple ABC logic.'
RTHK
6 hours ago
- Business
- RTHK
No plans to end HK's US dollar peg: CE
No plans to end HK's US dollar peg: CE The CE says firms should consider the national interest when pursuing commercial deals. Photo courtesy of SCMP. Chief Executive John Lee says there are no plans to change the city's US dollar peg. The Hong Kong dollar has been pegged to the US dollar since 1983 under the Linked Exchange Rate System. The Hong Kong Monetary Authority recently intervened heavily to defend the exchange rate as strong capital inflows, particularly from the mainland, pushed the Hong Kong dollar to the strong end of its trading band. In an interview with the South China Morning Post published on Monday, the CE said the peg is a cornerstone of Hong Kong's financial success and provides stability, especially during turbulent times. But he also said the SAR will not solely rely on the peg and will strengthen its position as the premier offshore renminbi hub, to create more trade. Currently, about 80 percent of offshore renminbi payments are processed through Hong Kong, the CE said. Lee also called on firms to consider the national interest when pursuing commercial deals. In March, local conglomerate CK Hutchison was embroiled in controversy over its plans to sell its Panama ports to a consortium led by a US investment firm. The CE used a metaphor to say that no one should harm the interests of the rest of the family. 'I can't find the logic that you, being a family member, can act against the interests of your family,' he said. 'The family allows you to pursue your best interests. You can be a reporter, you can be a singer. The family allows you to do it. But you don't come back home and destroy all the furniture, right? That can't be reconciled. I think that's simple ABC logic.'
Yahoo
21-03-2025
- Business
- Yahoo
HSBC, Standard Chartered keep their prime rates unchanged after HKMA, Fed hold fire
Hong Kong's de facto central bank kept its key interest rate unchanged in lockstep with the US Federal Reserve, as policymakers push any cuts back to later this year while they study the potential inflationary impact of President Donald Trump's tariffs. The Hong Kong Monetary Authority (HKMA) kept its base rate at 4.75 per cent on Thursday, prompting HSBC and its subsidiary Hang Seng Bank, Standard Chartered Bank, Bank of China (Hong Kong) to maintain their prime rates. Hours earlier, the Fed left its target rate in the 4.25 to 4.5 per cent range, following the second Federal Open Market Committee (FOMC) meeting of the year. The HKMA last cut the city's base rate to 4.75 per cent from 5 per cent in December, the lowest level since December 2022. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. The policy decision by FOMC is in line with market expectations, according to a statement issued by the HKMA on Thursday morning. Under a currency peg known as the Linked Exchange Rate System, Hong Kong's monetary policy has moved in lockstep with Fed policy since 1983. Federal Reserve chairman Jerome Powell during a press conference at the Federal Reserve in Washington on Wednesday. Photo: EPA-EFE alt=Federal Reserve chairman Jerome Powell during a press conference at the Federal Reserve in Washington on Wednesday. Photo: EPA-EFE> "Interest rates in Hong Kong might still remain at relatively high levels for some time, and the extent and pace of future US interest rate cuts are subject to considerable uncertainty," the HKMA said. But the pace of future rate cuts in the US remains uncertain as it is dependent on US inflation and labour market data developments, as well as the impact of fiscal, economic and trade policies adopted by the US government on economic activity, according to the city's de facto central bank. The public should carefully assess and continue to manage the interest rate risk when making property purchases, mortgages or other borrowing decisions, it said. A discount sign at a store in Los Angeles. Photo: EPA-EFE alt=A discount sign at a store in Los Angeles. Photo: EPA-EFE> The Fed's decision was widely expected, with rates traders fully pricing in the outcome, according to data compiled by the CME Group, based on Fed fund futures contracts on Wednesday. "I do think with the arrival of the tariff inflation, further progress may be delayed" in reaching the Fed's 2 per cent annual inflation target, now expected to be reached by the end of 2026, Fed chairman Jerome Powell said after the FOMC meeting. US policymakers expect inflation to accelerate to 2.7 per cent by the end of 2025, from the current level of 2.5 per cent, while economic growth slows to 1.7 per cent this year, from last year's 2.8 per cent. A Giant grocery store in McLean, Virginia on January 28, 2025. Photo: AFP alt=A Giant grocery store in McLean, Virginia on January 28, 2025. Photo: AFP> "We think the Fed will find it difficult to cut more than once or twice this year - even if prolonged uncertainty starts to hurt otherwise healthy growth," Jean Boivin, head of the BlackRock Investment Institute, said in a research note on Thursday. Hong Kong's stock market fell on Thursday, bucking the overnight rally on Wall Street. The benchmark Hang Seng Index eased 2 per cent at 3pm local after China kept its key interest rates unchanged. The higher inflation and slower growth may keep interest rates "higher for longer" and give the US the confidence to "only start cutting the rate again in the middle of this year", said Tommy Ong, managing director of the T.O. & Associates Consultancy on Wednesday before the Fed decision. "Consistent upwards pressure from US import tariffs makes it difficult to ease drastically." Commercial banks in Hong Kong might cut borrowing costs by 0.125 percentage points in the next policy-easing round, Ong added. Hong Kong's banking sector had ample liquidity while loan demand was low, he added, predicting that lenders could lower their lending rates to a historic low of 5 per cent later this year. Eddie Yue Wai-man, chief executive of Hong Kong Monetary Authority, during a briefing on the Exchange Fund's 2024 results on January 27, 2025. Photo: Edmond So alt=Eddie Yue Wai-man, chief executive of Hong Kong Monetary Authority, during a briefing on the Exchange Fund's 2024 results on January 27, 2025. Photo: Edmond So> "If prices continue to be controlled, the Fed may cut interest rates in the middle of this year," said Eric Tso Tak-ming, chief vice-president of mortgage broker mReferral. "This will create a positive impact on the property market in Hong Kong and boost the confidence of potential buyers. It is expected that the volume of transactions will rise." The HKMA cut its base rate three times totalling a full percentage point from September to December last year. Before the current rate-cut cycle began in September, the US and Hong Kong increased their key rates 11 times from March 2022 to July 2023, taking them to the highest level since December 2007. Inflation in the US quickened by a record 9.1 per cent in June 2022, forcing the Fed into its most aggressive policy tightening in 40 years. The one-month Hong Kong interbank offered rate (Hibor) weakened to 3.8128 per cent on Thursday from 4.1829 per cent at the beginning of this year. The three-month Hibor fell to 3.9256 per cent from 4.2039 per cent over the same period, according to data published by the Hong Kong Association of Banks. Hong Kong's commercial banks have trimmed their prime rate three times since September by a combined 62.5 basis points. The prime rate at HSBC, its subsidiary Hang Seng Bank and Bank of China (Hong Kong) stands at 5.25 per cent. The rate at Standard Chartered, Bank of East Asia, Citigroup, CCB Asia and other banks stands at 5.5 per cent. This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.
