Hong Kong Lowers Base Interest Rate to 4.0%

According to data from TradingEconomics, the Hong Kong Monetary Authority (HKMA) has reduced the base interest rate by 25 basis points to 4.0% on December 11, following a similar move from the U.S. Federal Reserve just hours earlier. This brings borrowing costs in the city to the lowest level since October 2022. This marks the third cut in 2025, implemented through the overnight discount window, reflecting the close linkage between Hong Kong's monetary policy and the U.S. Federal Reserve's direction, given the currency peg at 7.75–7.85 per dollar.

The decision came after remarks from HKMA Chief Executive Eddie Yue, who noted that the residential real estate market in Hong Kong shows signs of stabilization, while the commercial property sector remains under clear pressure. Hong Kong's economy recorded a growth of 3.8% year-on-year in the third quarter, up from 3.1% in the second quarter, marking the fastest expansion rate in nearly two years, driven by stable private consumption, improved exports, and a strong recovery in the tourism sector.