HKMA Lowers Base Rate to 5% Following Fed's 25 Basis Point Cut

HKMA's response to US Fed's Interest Rate Decision

The following is issued on behalf of the Hong Kong Monetary Authority:

The Federal Open Market Committee of the United States Federal Reserve (the Fed) just announced its decision to cut thetarget range for the federal funds rate by 25 basis points, to 4.5-4.75 per cent. The HKMA has reduced the Base Rate to 5 per cent according to the established mechanism with immediate effect.

The Fed further cut interest rates as expected by the market to implement less restrictive monetary policy. However, the pace of future rate cuts remains uncertain as it is subject to US economic data, which will be influenced by fiscal, economic and trade policies. Furthermore, monetary policies across the major economies are not entirely in sync. The risk of global financial market volatility should continue to be closely monitored.

Our financial and monetary markets have continued to operate in a smooth and orderly manner. Market liquidity condition has remained stable, and the Hong Kong dollar exchange rate stays steady. Under the Linked Exchange Rate System, Hong Kong dollar interbank rates generally track the US dollar counterparts, while shorter-tenor interbank rates tend to be also influenced by the supply and demand of Hong Kong dollar funding in the local market such as seasonal effects and capital market activities.

With regard to deposit and lending rates, banks will normally take into account factors such as funding supply and demand in the interbank market, the level of interbank rates and their own funding cost structures to access the merit and extent of adjustments, if any. The rate-cut cycle in the US is still at its initial stage. Interest rates might still remain at relatively high levels for some time. The public should carefully assess and continue to manage the interest rate risk when making property purchase, mortgage or other borrowing decisions.

The rate-cut decision in the US will not affect our financial and monetary stability. The HKMA will closely monitor market developments including trends of interest rates and movements of funds around the global markets to ensure financial and monetary stability.

Meeting attendance of members of District Councils in 2024

The Home Affairs Department (HAD) made the following clarifications today (January 2) regarding certain media reports on the meeting attendance of the current-term members of the District Councils (DCs) in 2024:

(1) The current-term DC members were diligent in their work, with over 98 per cent of 470 members having attended all DC meetings or were only absent with the DC's consent; over 90 per cent having attended all committee/working group meetings or were only absent with the DC's consent. Aside from attending DC meetings, each DC member on average attended 28 committee/working group meetings;

(2) all DC members fulfilled the requirement under the Performance Monitoring Guidelines for Members of the DCs (the Guidelines), i.e. attendance rate of not lower than 80 per cent and no DC members were in violation of the requirement; certain reports were incorrect in stating that some DC members were in violation of the Guidelines due to their absence at meetings since absence at an individual meeting was not a violation in itself; and

(3) for the purpose of calculating attendance, the Guidelines stipulate certain reasons for absence that would be consented by the DCs, including sickness and attendance at another meeting or an activity on behalf of the DCs etc. If a DC member were absent from meetings due to the aforementioned reasons with the DC's consent, the absence would not affect his/her attendance rate. If a DC member were absent from meetings due to other reasons (i.e. personal matters), the absence would be counted towards his/her attendance rate.

​The HAD hoped that media outlets and members of the public would have an accurate understanding of DC members' attendance situation at meetings. The current-term DC members' attendance rate at meetings was the highest amongst all previous terms, which fully demonstrated DC members' efforts and work in improving governance at the district level.