The Hong Kong Monetary Authority (HKMA) left its base rate unchanged at 4.0% on July 30, 2026, following the U.S. Federal Reserve’s decision at its fifth FOMC meeting of the year to keep the federal funds target range steady. The move aligns with Hong Kong’s Linked Exchange Rate System, which pegs the Hong Kong dollar within a trading band of 7.75–7.85 per U.S. dollar and effectively requires local interest rates to closely track U.S. monetary policy, irrespective of domestic economic conditions.
The HKMA’s latest decision came against the backdrop of a resilient domestic economy. Hong Kong’s annual GDP growth reached a near five-year high of 5.9% in Q1 2026, supported by solid domestic demand and robust external trade. At the same time, businesses continued to grapple with geopolitical uncertainty and persistent supply chain disruptions related to the conflict in the Middle East.
Both the Fed and the HKMA reduced their benchmark rates by a cumulative 75 basis points in 2025, following a combined 100 basis points of rate cuts in 2024.
