The US Federal Reserve kept its target range at 3.75% to 4%; the HKMA left Hong Kong’s base rate at 4.25%.
The HKMA said the persistent interest-rate gap between Hong Kong and the US could contribute to the Hong Kong dollar weakening gradually through carry-trade activity. It said the outlook for the currency and interbank rates could also be affected by market appetite for carry trades and by Hong Kong-dollar supply and demand, which can shift with capital-market activity and seasonal factors.
The authority said changes in US interest rates remained highly uncertain, depending on inflation, labour-market conditions and other economic data. Those changes could, in turn, affect Hong Kong’s interest-rate environment.