Hong Kong authorities announced on Thursday A 75 basis point hike in the benchmark interest rate after the US Federal Reserve make a similar increase to combat inflation.
Thus, the rate is set at 2%, as indicated in a statement by the Monetary Authority of Hong Kong, the central bank of the former British colony, which belongs to China but has autonomy in areas such as border control or, more specifically, monetary policy.
Since pegging the Hong Kong dollar to the US dollar in 1983, the institution has followed in the footsteps of the Federal Reserve, placing interest rates 50 basis points above the bottom of the range set by the North American central bank. .
So, with the Fed setting the spread at 1.5% and 1.75% and Hibor at 0.2%, The Monetary Authority raised its reference rate from 1.25% to 2%.
local newspaper South China Morning Newspaper make it clear Interest rates in Hong Kong will rise to about 4% if the Fed follows its plan to rise Its rates will reach 3.75% by the end of 2023.
The same newspaper quoted the local government finance minister, Paul Chan, as saying that Rising prices, along with inflationary pressures, will lead to more “volatility” in global stock marketsAnd Hong Kong’s exports will be affected.
Similarly, Chan expected a greater outflow of capital from Hong Kong due to higher rates in the US, though He said the city’s banking sector “remains resilient” with more than HK$280 billion ($35,670 million, €34,159 million) in liquidity “more than enough to defend the stability” of the domestic financial system.
Hong Kong’s economy has struggled in recent years, with six consecutive quarters of GDP contraction since mid-2019, first due to the pro-democracy protests that year and then due to the impact of the COVID-19 pandemic.
In 2019, the domestic GDP decreased by 1.7%, in 2020 it decreased even more (-6.5%), while in 2021 it rebounded by 6.3%; However, in the first quarter of this year, Hong Kong’s economy contracted again, specifically by 4% year-on-year.
(With information from EFE)
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