Hong kong: The Hong Kong Monetary Authority (HKMA) has announced a reduction in its benchmark interest rate by 25 basis points, aligning with the recent decision by the US Federal Reserve to lower its policy interest rate. This adjustment is influenced by Hong Kong's exchange rate regime, which is pegged to the US dollar.

According to Anadolu Agency, the base rate has been lowered to 4% from the previous 4.25%, as stated by the HKMA in an official announcement. The central bank's decision to cut the rate comes in the wake of the Fed's similar move, and it is anticipated that major Hong Kong commercial banks such as HSBC, Standard Chartered, and Bank of China (Hong Kong) will follow suit by reducing their lending rates.

This recent rate cut signifies the HKMA's third adjustment this year, reflecting the Federal Reserve's monetary policy actions. The Fed had previously reduced its policy rate by 25 basis points in both September and October, prompting the HKMA to implement corresponding cuts during those months.

The impetus for the Federal Reserve's rate reduction on Wednesday, which brought the policy rate to a range of 3.5% - 3.75%, was attributed to the slowing labor market in the United States. Hong Kong, maintaining its currency's peg to the US dollar since 1983, continues to align its monetary policy with the Fed's actions.