Friday, December 16, 2011

HKMA Keeps Interest Rate at 0.50% Following Fed

The Hong Kong Monetary Authority sustained its base interest rate unchanged at 0.50% following the decision of the US Federal Reserve to leave the fed funds rate unchanged at 0-0.25%.  The HKMA said in a report: "Worries about the global economic prospect have escalated over the past few months. The pace of recovery in the G2 economies has been much weaker than expected, triggering repeated downgrades of their output growth projections. Market confidence has also become fragile, following the downgrade of the US sovereign rating and the slow progress in resolving the intensifying debt crisis in the euro area."

The HKMA also previously held its base interest rate unchanged at 0.50%, after the FOMC met in November this year and announced rates would stay low until mid 2013.  The Hong Kong Monetary Authority generally tends to follow the monetary policy decisions of the US Federal Reserve's Federal Open Market Committee as the Hong Kong Dollar is fixed against the United States Dollar.  

Hong Kong reported consumer price inflation of 5.8% in October and September, compared to 5.7% in August, 7.9% in July, 5.6% in June, 5.2% in May and 4.6% in April this year.  Hong Kong's economy expanded 0.5% in Q2 this year, (2.8% in Q1), placing year on year GDP growth at 5.1% (7.5% in Q1).  The Hong Kong dollar is fixed against the U.S. currency at an exchange rate of between HK$7.75 and HK$7.85 per dollar; the USDHKD exchange rate last traded at 7.785

1 comment:

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