HKMA responds to Fed's interest rate decision: Hong Kong's monetary and financial markets continue to operate in an orderly manner

The Federal Open Market Committee of the US Federal Reserve announced in the early hours of today (29 October) Hong Kong time that it would keep the target range for the federal funds rate at 3.75-4%. The Fed's decision to keep rates unchanged was in line with market expectations. The statement issued after the meeting said that economic activity has been growing at a strong pace and the job market has remained stable; inflation remains at a relatively high level, reflecting the Committee's attention to the inflation outlook, but it may take longer to observe changes in the data. In Hong Kong, the monetary and financial markets continue to operate in an orderly manner. A notable interest rate spread between the Hong Kong dollar and the US dollar persists, and carry trades may cause the Hong Kong dollar to weaken gradually, but there are many variables in the direction of the Hong Kong dollar exchange rate and interbank rates, such as the market's appetite for carry trades, and the supply and demand of Hong Kong dollar funds, including the impact of capital market activities and other seasonal factors. There is considerable uncertainty in changes in US interest rates, which will depend on the inflation trend, labour market conditions and other economic data, and will also affect Hong Kong's interest rate environment. Members of the public should fully consider and manage interest rate risk when making decisions on property purchase, investment or borrowing. The Hong Kong Monetary Authority will continue to closely monitor market changes and maintain monetary and financial stability.