Hong Kong Maintains Base Rate at 4% After Fed Move

The Hong Kong Monetary Authority (HKMA) kept its base rate unchanged at 4.0% on January 29, 2026, following the U.S. Federal Reserve’s decision hours earlier to hold its target range at 3%–3.75%. Set via the overnight discount window, the move underscores Hong Kong’s tight policy alignment with the U.S. under the Linked Exchange Rate System, which pegs the local dollar at 7.75–7.85. As a result, domestic rates largely track U.S. policy regardless of local conditions. The decision came amid signs of recovery in the city's economy, where housing prices rose for the seventh straight month in December and gained 3% in 2025, the first annual outperformance in four years. In Q3 2025, economic growth accelerated to 3.8% yoy from 3.1% in Q2, the fastest pace in nearly two years, supported by resilient consumption, steady exports, and a rebound in tourism.

The Hong Kong Monetary Authority (HKMA) slashed its base rate by 25 basis points to 4.0% on December 11, mirroring the U.S. Federal Reserve’s move hours before and bringing borrowing costs to their lowest level since October 2022. It was the HKMA’s third rate reduction this year. Implemented through the overnight discount window, the adjustment underscores Hong Kong’s policy alignment with the U.S., as the city’s currency remains firmly pegged to the dollar at 7.75–7.85. The latest decision came after HKMA Chief Executive Eddie Yue recently noted that Hong Kong’s residential property market has stabilized, though the commercial real estate sector continues to face headwinds. Hong Kong's economy expanded 3.8% year-on-year in Q3, accelerating from 3.1% in Q2 and marking its fastest pace in nearly two years, buoyed by stable private consumption, solid exports and a robust rebound in tourism.

The Hong Kong Monetary Authority (HKMA) cut its base rate by 25 basis points to 4.25% on October 30, following a similar move by the U.S. Federal Reserve and marking the lowest level since November 2022. It was the HKMA’s second rate reduction this year, after a 25-basis-point cut in September. The base rate, applied through the overnight discount window, underscores Hong Kong’s policy alignment with the U.S., as the city’s currency remains tightly pegged to the U.S. dollar. The move came ahead of the release of Hong Kong’s third-quarter GDP data. In the second quarter, the economy expanded 3.1% year-on-year, following a 3.0% growth in Q1, supported by strong exports and improving domestic demand. However, the government cautioned that persistent trade policy uncertainty could weigh on investment and cross-border trade. The HKMA chief executive, Eddie Yue, reiterated that the extent and pace of future U.S. interest rate cuts are still subject to uncertainty.