Hong Kong Follows Fed With Rate Cut in Boost for Economy

By Alan Wong

November 07, 2024 at 6:31PM EST

Ferries cross Victoria Harbor in Hong Kong, China, on Wednesday, July 15, 2020. Hong Kong implemented its strictest suite of social distancing measures yet as the Asian financial hub looks set to be the first in the region where a new outbreak surpasses previous waves in severity. Photographer: Lam Yik/Bloomberg (Lam Yik/Bloomberg)

(Bloomberg) -- The Hong Kong Monetary Authority cut its base interest rate after the US Federal Reserve eased policy, in a move that should support an economy struggling with weak spending.

The HKMA lowered rates by a quarter-percentage point to 5% on Friday, following the Fed in lockstep as the city has a currency peg to the greenback.

The cut in Hong Kong will be welcome relief for businesses and homeowners, who have faced years of steep borrowing costs as the Fed raised interest rates to fight inflation. That has been a major drag on the financial hub’s housing market and economy that slowed to the weakest pace in five quarters.

HSBC Holdings Plc, the city’s largest lender, and other banks usually announce their best lending rate later in the day following the HKMA rate decision.