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HK Key Interest Rate Cut by 0.5% Point
The Hong Kong Association of Banks (HKAB) announced Friday the decision to cut the maximum deposit interest rate for savings accounts by 0.5 percentage point to 4.25 percent.
This matched the US Federal Reserve's cut of its key rate by 0.5 percentage point on Wednesday to boost the slowing economy. Hong Kong typically follows the US in interest rate movements due to the local currency's peg to the US dollar.
HSBC Holdings Plc units Hongkong and Shanghai Banking Corp. and Hang Seng Bank said they will lower their prime lending rate by 50 basis points to 9 percent effective from Monday. Other banks including Standard Chartered Bank and Dao Heng Bank are also cutting their best lending rates by 50 basis points.
Peter Wong, chairman of the Hong Kong Association of Banks, said he expects the US to cut interest rates by a total of 1 percentage point this year, and that it will probably cut rates by 25 basis points again later in this quarter.
Hong Kong overnight and one-week interest rates are set by the HKAB, while individual banks are free to set their own longer-term and time deposit and lending rates.
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