September 27, 2022

Monetary hub’s de facto central financial institution lifts key fee to three.5 p.c after newest fee hike in the US.

Hong Kong has raised its benchmark rate of interest to a 14-year excessive following the United States Federal Reserve’s aggressive 0.75 share level hike in a single day.

The Hong Kong Financial Authority, the worldwide monetary hub’s de facto central financial institution, on Thursday lifted the important thing borrowing fee by 0.75 share level to three.5 p.c, following the US central financial institution’s third straight 0.75 share level hike.

Hong Kong’s financial coverage strikes in lock-step with the US as the town’s foreign money is pegged to the greenback.

Whereas inflation is operating rampant within the US and throughout a lot of the world, Hong Kong’s authorities has forecast modest worth development of two.1 p.c for the 12 months. The Chinese language-ruled metropolis entered its second recession in three years through the second quarter as strict COVID-19 curbs, together with border restrictions, stifled financial exercise.

Hong Kong Monetary Secretary Paul Chan on Thursday advised native media there was a “very excessive likelihood” the town would finish the 12 months in recession.

The US Ate up Wednesday signalled it will proceed to drive up the price of borrowing within the coming months because it seeks to rein in excessive inflation, elevating the danger of tipping the world’s largest financial system into recession.

Dutch multinational monetary companies agency ING mentioned in a observe following the Fed’s newest choice {that a} downturn was wanting “nearly not possible to keep away from”.

“The Fed is successfully acknowledging {that a} recession is coming, however inflation won’t fall shortly and there might be numerous ache,” ING mentioned within the observe.

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