30th January 2025 – (Hong Kong) The Hong Kong Monetary Authority (HKMA) has responded to the United States Federal Reserve’s decision to maintain its target range for the federal funds rate at 4.25–4.5 per cent. The announcement, made after the Federal Open Market Committee’s two-day meeting on 30th January (Hong Kong time), aligns with market expectations.
While the decision provides some clarity, the path ahead for U.S. interest rates remains uncertain. Future rate adjustments will depend on several factors, including U.S. inflation trends, labour market dynamics, the cumulative effects of prior rate changes, and the influence of fiscal and economic policies under the current administration.
In Hong Kong, financial and monetary markets continue to function smoothly. The Hong Kong dollar exchange rate remains stable under the Linked Exchange Rate System, with local interbank rates generally tracking their U.S. counterparts. Shorter-term interbank rates are also influenced by local factors such as seasonal demand for Hong Kong dollar funding and activity in the capital markets.
Despite the Fed’s unchanged stance, interest rates in Hong Kong are expected to remain elevated for some time. Given the uncertainty surrounding the pace and extent of future U.S. rate adjustments, the HKMA has urged the public to carefully evaluate their interest rate risks when making financial decisions, such as property purchases, mortgages, or other borrowings.
