Li Dazhi: Short-term Hong Kong dollar interbank rates remain at relatively high levels. Pay attention to global market fluctuations and risks

According to the Wise Finance APP, on September 18th local time, the Federal Reserve announced a significant 50 basis point rate cut, lowering the federal funds target range to 4.75%–5%. Subsequently, the Hong Kong Monetary Authority reduced the base rate by 0.5 percentage points to 5.25%, effective immediately, marking the first rate cut by the Hong Kong Monetary Authority since 2020. Acting Chief Executive of the Hong Kong Monetary Authority, Eddie Wu, stated that with the decline in U.S. interest rates, there is room for Hong Kong market rates to fall, which has a positive impact on the economy. However, the timing of adjustments to bank deposit and lending rates needs to consider a range of factors. Additionally, Hong Kong's Prime Rate (P) did not fully align with U.S. rate hikes during the Federal Reserve's tightening cycle, so the speed of reducing P may not necessarily be completely synchronized with the U.S. Eddie Wu mentioned that interest rates are expected to remain relatively high for a visible period of time, and citizens should continue to carefully consider and manage risks when engaging in property purchases, mortgages, and borrowing activities. Eddie Wu pointed out that the U.S. has raised interest rates by a cumulative 5.25% during the tightening cycle, inflation has entered the expected decline, and the labor market has begun to cool. The half-percent rate cut by the Federal Reserve this time roughly meets expectations. The Federal Reserve's dot plot indicates that there may be further rate cuts of 0.5% and 1% respectively in the coming year, but future rate cuts still remain uncertain and will depend on U.S. inflation and labor market conditions, as well as the impact of rate cuts on the economic situation. Investors should pay attention to global market fluctuations and risks. Currently, Hong Kong's monetary and financial markets are operating smoothly, and the Hong Kong dollar is stable. Short-term interest rates are influenced by factors such as fund supply and demand, capital market activities, etc. Currently, Hong Kong dollar interbank rates are generally approaching U.S. dollar rates, especially for longer-term interbank rates, but short-term rates are influenced by factors such as fund supply and demand, capital market activities, seasonal factors, etc. The Hong Kong Monetary Authority stated that in response to the U.S. lowering the federal funds target range by 50 basis points on September 18th (U.S. time), with the lower limit of the current U.S. federal funds target range being 5.25%, and the 5-day moving average of the overnight and 1-month Hong Kong Interbank Offered Rates (HIBOR) being 3.21%, the basic rate is set at 5.25% according to a predetermined formula. The Hong Kong Monetary Authority will closely monitor changes in financial markets Eddie Wu emphasized that the initiation of a rate cut cycle in the U.S. will not affect the stability of Hong Kong's currency and financial markets. However, due to the incomplete synchronization between the two economies of the Hong Kong dollar and the U.S. dollar, adjustments in monetary policy will inevitably affect financial market fluctuations. The Hong Kong Monetary Authority will closely monitor changes in financial markets, the impact of the rate cycle on the currency, and ensure the stability of the currency and financial markets. The cost of funds is just one of the factors influencing investor sentiment Eddie Wu mentioned that this rate cut brings a relatively loose change to the global financial environment, providing room for maneuver for small and medium-sized enterprises or individuals with borrowing needs. However, the impact and transmission of rate cuts on the overall economy and fund flows still depend on other developments, such as external economic conditions and international geopolitics. Moreover, the cost of funds is just one of the factors influencing investor sentiment. After a two-day meeting, the Federal Open Market Committee (FOMC) decided to lower the federal funds target range by 0.5 percentage points to 4.75%–5% following the Federal Reserve Chairman Powell's warning that this 0.5% rate cut does not necessarily mean that future rate cuts will maintain this pace. Nevertheless, traders have increased their bets on the pace of future rate cuts in the U.S