HKMA Chief Executive Eddie Yue: Financial markets are operating normally, reminds the public to be mindful of interest rate risks.

On September 17, HKMA Chief Executive Eddie Yue issued a statement noting that the US Federal Reserve's Federal Open Market Committee announced in the early hours of today, Hong Kong time, a 25 basis point rate hike, raising the target range for the federal funds rate to 3.75-4%. The HKMA, in accordance with the established mechanism, raised the Base Rate of the Discount Window to 4.25%, effective immediately. The Fed's rate hike this time was in line with market expectations. The statement issued after the meeting indicated that the economy continues to grow and the job market remains stable, but inflation remains at a high level. The decision to raise rates this time reflects the Committee's concern about the inflation outlook. In Hong Kong, the monetary and financial markets continue to operate in an orderly manner. The interest rate differential between Hong Kong and the US has widened further, and carry trades may gradually weaken the Hong Kong dollar. There is considerable uncertainty in the direction of the Hong Kong dollar exchange rate and interbank rates, particularly affected by the Hong Kong-US interest rate differential, Hong Kong dollar funding supply and demand such as capital market activities, and other seasonal factors. As for deposit and lending rates, banks will generally consider factors such as supply and demand of interbank market funds, interbank rates and current relevant interest rate levels, and their own funding cost structure to assess whether adjustments are needed and the extent of such adjustments. Changes in US interest rates are subject to considerable uncertainty and will depend on inflation trends, job market conditions, and other economic data, which will also affect Hong Kong's interest rate environment. The public should fully consider and manage interest rate risks when making decisions on property purchases, investments, or borrowing. The HKMA will continue to closely monitor market changes and maintain monetary and financial stability.