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Hong Kong raises benchmark interest rate to 14-year high | Inflation


The financial center’s de facto central bank raised its key interest rate to 3.5% following the most recent rate hike in the United States.

Hong Kong raised benchmark interest rate to 14-year high US Federal Reserve surges 0.75 percentage points overnight.

The Hong Kong Monetary Authority, the de facto central bank of the international financial centre, on Thursday raised its key borrowing rate by 0.75 percentage points to 3.5 per cent, after a 0.75 percentage points in a row for the third consecutive US central bank.

Hong Kong’s monetary policy moves in the direction of a lockdown with the US as the city’s currency is pegged to the dollar.

While inflation is on the rise in the US and around the world, the Hong Kong government has forecast modest price growth of 2.1% for the year. The Chinese-ruled city entered its second recession in three years in the second quarter as strict COVID-19 regulations, including border restrictions, stifled economic activity.

Hong Kong Finance Minister Paul Chan on Thursday told local media that there was a “very high probability” the city would end the recession year.

The US Fed on Wednesday signaled that it will continue to raise borrowing costs in the coming months as it seeks to contain high inflation, raising the risk of pushing the world’s largest economy into recession.

Dutch multinational financial services company ING said in a note following the Fed’s latest decision that a recession seemed “virtually inevitable”.

“The Fed is effectively acknowledging that a recession is coming, but inflation will not fall quickly and there will be a lot of pain,” ING said in the note.



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