Hong Kong maintains base rate at 4.75% as Fed holds fire on Trump’s tariff fallout

Hong Kong’s de facto central bank kept its key interest rate unchanged in lockstep with the US Federal Reserve, as policymakers push any cuts back to later this year while they study the potential inflationary impact of President Donald Trump’s tariffs.

The Hong Kong Monetary Authority (HKMA) maintained its base rate at 4.75 per cent on Thursday. Hours earlier, the Fed left its target rate in the 4.25 to 4.5 per cent range, following the second Federal Open Market Committee (FOMC) meeting of the year.

The HKMA last cut the city’s base rate to 4.75 per cent from 5 per cent in December, the lowest level since December 2022.

The Fed’s decision was widely expected, with rates traders fully pricing in the outcome, according to data compiled by the CME Group, based on Fed fund futures contracts on Wednesday.

“I do think with the arrival of the tariff inflation, further progress may be delayed” in reaching the Fed’s 2 per cent annual inflation rate, Fed chairman Jerome Powell said after the FOMC meeting.

“The US may only start cutting the interest rate again in the middle of this year,” said Tommy Ong, managing director of the T.O. & Associates Consultancy on Wednesday before the Fed decision. “Consistent upwards pressure from US import tariffs makes it difficult to ease drastically.”