Hong Kong's central bank rates in line with Fed

Hong Kong's central bank rates in line with Fed

HONG KONG The base rate charged through the overnight discount window was lifted by 25 basis points to 5.25 per cent, hours after the U.S. Federal ReserveFederal Reserve gave a rate rise of the same margin.

Hong Kong's monetary policy moves in line with the U.S. as the city's currency is pegged to the dollar in a tight range of 7.75 -- 7.85 per dollar.

The Fed's rate-hike decision is consistent with market expectation, but there will still be considerable uncertainties on the interest rate path in the US, HKMA said in a statement.

The Federal ReserveFederal Reserve raised interest rates by a quarter of a percentage point, but indicated that it was on the verge of pausing further increases in borrowing costs after the collapse of two U.S. banks.

The Federal Open Market CommitteeFederal Open Market Committee policy statement said the U.S. banking system was sound and resilient. HKMA said individual banks in the US had recently exhibited financial health and liquidity problems, which could lead to credit tightening. It is too soon to assess how much this will affect economic activities and monetary policy. The financial and monetary markets of Hong Kong continued to operate in a smooth and orderly manner, despite the volatility of overseas markets, and Hong Kong dollar interbank rates may remain at elevated levels for some time, according to the HKMA.