 |
US Rate Cut Expected to Boost HK Economy
The abrupt half a percentage point cut in the US interest rate Wednesday will help boost Hong Kong's economy, senior Hong Kong officials said Thursday, January 4.
"This reduction in interest rate will surely help preventing a hard landing in the US economy. It would then also help various markets in Asia from going slow very quickly as a result of the US market," said Hong Kong Financial Secretary Donald Tsang.
"As far as Hong Kong is concerned, because we are linked to the US dollar it will certainly impact on the interest rate which will become correspondingly lower. It will help the people who are servicing mortgages, it will help businesses in borrowing money from the banks, and it might give some incentive to the investment in the securities market," he said.
Hong Kong stocks rocketed by 4.42 percent, or 645.45 points, to close at 15,235.03 Thursday, with the rate-sensitive banking sector and property sector soaring by 3.73 percent and 7.69 percent.
Hong Kong Chief Executive Tung Chee Hwa also hailed the rate reduction, saying that the reduction would enhance the chance of Hong Kong's further economic growth and benefit more Hong Kong people.
The Hong Kong Monetary Authority cut the discount rate by 0.5 percentage points following the U.S. rate cut.
The market expected that the Hong Kong Association of Banks would slash the interest rate by half a percentage point Friday.
Local experts held that there is room for further U.S. rate cut and expected the reduction for the whole year to range between one to two percentage points.
In This Section
|