Chen Maobo: The US interest rate cut generally meets market expectations. Hong Kong's interest rate adjustments do not necessarily follow suit.

On the 18th, the Federal Reserve announced a 50 basis point cut in the federal funds rate target range to a level between 4.75% and 5.00%. Hong Kong Financial Secretary Paul Chan Mo-po stated that the direction of Hong Kong interest rates is expected to follow the trend of US interest rates, but the speed and magnitude of interest rate adjustments in Hong Kong will depend not only on US factors, but also on local capital flows and market conditions, which may not necessarily be synchronized. Paul Chan Mo-po stated that the Fed's rate cut roughly met market expectations and was generally expected to be the beginning of a rate cut cycle. The Fed was cautious in its discussion, the local economic conditions were favorable, but job creation was slowing down, and uncertainties such as the upcoming US elections and geopolitical factors were still present. After a two-day monetary policy meeting, the Federal Reserve also released a statement stating that recent indicators indicated continued steady expansion in US economic activity, with job growth slowing down, unemployment rate rising but still at a low level. Inflation was moving further towards the 2% target, but was still slightly higher at the moment. The Fed's confidence in inflation moving towards the 2% target has strengthened, and it assesses that the risks of achieving full employment and inflation targets are roughly balanced. There were uncertainties in economic outlook and the Fed would continue to monitor the risks facing its dual mandate. The economic forecast summary released by the Fed that day showed that compared to June, the Fed had lowered its median GDP growth rate forecast for this year by 0.1 percentage point to 2%, and lowered its inflation and core PCE price index forecast by 0.2 percentage points to 2.6%. In addition, the dot plot in the summary showed that Fed officials predicted the median federal funds rate would decrease to 4.4% by the end of 2024 and to 3.4% by the end of 2025, indicating that there would be multiple rate cuts in the future. Paul Chan Mo-po cautioned that Hong Kong needed to continue to be cautious and monitor the situation closely. He evaluated that when US interest rates decrease, it would benefit Hong Kong businesses when Hong Kong interest rates also decrease, and the impact on asset markets would also be positive. Paul Chan Mo-po stated that in addition to attending meetings, he would also engage in investment promotion work and visit companies, with the goal of attracting more mainland Chinese companies to Hong Kong, including technology companies, and promoting Hong Kong as a regional supply chain management center for expanding international markets.