HONG KONG (AP) — Hong Kong’s central bank lowered its key interest rate to an all-time low Wednesday in response to the Federal Reserve’s historic rate cut.
The Hong Kong Monetary Authority slashed the base rate from 1.5 percent to 0.5 percent, it said in a statement. Because the territory’s currency is pegged to the dollar, the monetary authority’s actions usually track the Fed’s.
The cut was likely to ratchet up pressure on Hong Kong banks to lower their own lending rates. The local economy is already in recession.
"We’ve provided a very loose monetary policy," Joseph Yam, the authority’s chief executive, told reporters. "We hope banks can make use of this loose policy to support the Hong Kong economy, even though they are now facing a difficult business environment."
Overnight, the U.S. central bank announced a steeper-than-expected cut of 0.75 percent that reduced the rate at which banks lend to one another to a range of zero to 0.25 percent — unprecedented in the Fed’s 95-year history.
The move was aimed at fighting one of deepest U.S. recessions since the Great Depression.
The territory’s lending markets loosened as a result, with the Hong Kong interbank offered rate, known as Hibor, for three-month loans diving from 1.5 percent to 1.19 percent. |
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