HKMA warns of interest rate risks as Fed holds steady

The Hong Kong Monetary Authority (HKMA) on Thursday reminded the public to carefully manage interest rate risks when making property, investment or borrowing decisions, after the US Federal Reserve kept its benchmark rate unchanged. The Fed's Federal Open Market Committee decided to hold the target range for the federal funds rate at 3.75 to four percent, a move in line with market expectations. "Hong Kong's monetary and financial markets have continued to operate in an orderly manner," the HKMA said in a statement. It noted that with the persistent interest rate differential between the Hong Kong and US dollars, trade activities may cause the local currency to gradually ease. However, the HKMA said the outlook for the Hong Kong dollar and interbank rates could vary depending on factors such as market risk appetite for carry trades and the supply-demand conditions for the local currency, which are in turn influenced by capital market activities and other seasonal factors. It added that US interest rate adjustments remain subject to considerable uncertainty and will depend on developments in inflation, the labour market and other economic data, which may in turn affect the interest rate environment in Hong Kong. The HKMA said it will continue to closely monitor market developments...