The city’s de facto central bank was closely monitoring the development and impact of trade frictions after US President Donald Trump announced tariffs on goods from China, Canada and Mexico, said Eddie Yue Wai-man.
“In the event of a trade war [or] trade friction, it will have an impact on global economic inflation and even the supply chain,” Yue said on Monday after meeting members of the Legislative Council. “No economy will benefit and no one will be the winner.”
The details of the tariff policies and retaliation approaches remained to be seen, but could slow the global economy and raise inflation in the US and even globally, Yue said. Beijing said on Sunday that it would challenge Trump’s tariffs at the World Trade Organization and take countermeasures to safeguard its interests.
The US Federal Reserve’s interest-rate decisions would be essential to Hong Kong, which has been in lockstep with the Fed’s monetary policy since 1983 under its linked exchange rate system, Yue said.
The overall direction of the interest-rate cycle was down even though the magnitude of the cuts had yet to be seen and the pace was slower than expected, he added.
Amid high interest rates, Hongkongers should be careful about taking out loans and servicing mortgages, Yue said, adding that the HKMA would monitor the bad-loan situation.
