HKMA warns of uncertainty after keeping rates unchanged as Fed defies Trump pressure

HKMA says Trump tariffs have increased uncertainty about US inflation and the economic growth outlook

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Tourists visit at the waterfront of Victoria Harbour in Tsim Sha Tsui, during the “Golden Week”. 04MAY25 SCMP/ Sam Tsang

Published: 7:00am, 8 May 2025Updated: 5:04pm, 8 May 2025

The Hong Kong Monetary Authority (HKMA) on Thursday warned of the economic unknowns that have been unleashed by US tariffs after it earlier kept its base rate unchanged.

“The series of tariff measures recently announced by the US authorities have further increased uncertainty about US inflation and the economic growth outlook,” the city’s de facto central bank said in a statement. “The Fed therefore is adopting a patient approach to its monetary policy.”

It added that the way forward for US tariffs and interest rates was not clear.

“Global financial markets would inevitably be affected and exhibit volatility,” the HKMA said. “The public should carefully assess and manage risks when making property purchases, investments or borrowing decisions.”

Earlier on Thursday, the HKMA kept its base rate unchanged at 4.75 per cent. Overnight in Washington, the US Federal Reserve kept its target rate range at 4.25 to 4.5 per cent, as policymakers awaited clarity on the potential inflationary impact of President Donald Trump’s tariffs.

HSBC Holdings, subsidiary Hang Seng Bank and Bank of China (Hong Kong) said they would keep their deposit and prime lending rates unchanged, according to separate statements on Thursday. Their prime rates will remain at 5.25 per cent, while their savings rates would stay at 0.25 per cent for deposits over HK$5,000 (US$645).