Hong Kong banks may cut rate to record low 5% in 2025, benefiting property and economy
A straw poll of 10 analysts surveyed by the Post expect up to three rate cuts by the Federal Reserve and HKMA totalling as much 75 basis points
After the US Federal Reserve and Hong Kong Monetary Authority (HKMA) cut their key policy rate by a full percentage point in 2024, at least two more rates are possible next year, according to analysts.
Hong Kong banks, meanwhile, may further cut their lending rate to a historical low of 5 per cent, which would benefit the economy and property sector, they added.
The market expects the Fed to hit pause on rate cuts in the first half of 2025, followed by two or three reductions in the second half for a combined 50 to 75 basis points, according to 10 analysts polled by the Post.
“The US next year will continue to cut rates, but the pace and frequency of rate cuts may be less than initially expected,” Eddie Yue Wai-man, the CEO of HKMA, said on December 19.
Hong Kong’s de facto central bank cut its base rate to 4.75 per cent, the lowest since December 2022, after the Fed cut its rate by the same amount to a range of 4.25 to 4.50 per cent. Both institutions reduced their key rate by a full percentage point in 2024, while local commercial banks cut their prime rate, the lending rate offered to their best customers, by 62.5 basis points.
