Standard Chartered and HSBC, two of Hong Kong's biggest banks, have slashed their key benchmark rates in the city, their largest market.
HSBC cut its best lending rate by 12.5 basis points to 5% in Hong Kong. Standard Chartered , another major lender in the city, soon followed HSBC's announcement, reducing its best lending rate by 12.5 basis points to 5.25%.
The HKMA lowered its base rate to 2% from 2.25%, hours after the Fed's quarter-point cut, according to the institution's page on Bloomberg. As the Hong Kong dollar is linked to the greenback, the territory essentially imports US monetary policy.
Falling benchmark rates in Hong Kong and the United States will "make the operating environment for banks like HSBC more challenging in the future," George Leung, an advisor at the lender, told reporters on Thursday, Reuters writes.
Looking ahead, we expect there's still downward pressure on the US rate"
"Looking ahead, we expect there's still downward pressure on the US rate," Leung said. "This is likely to make the operating environment for banks like HSBC more challenging in the future, but we hope that it will bring some relief to our customers and maybe a little bit of sunshine to the gloomy economic outlook."
The Hong Kong government has laid out policy support including boosting loans to small businesses and cutting banks' capital buffers to mitigate an economic downturn through the months-long unrest.
It also announced plans this month to help first-time homebuyers break into the world's least-affordable property market.
Eddie Yue, HKMA chief executive, told reporters that Hong Kong's economy was facing "very large" downward pressure, partly because of "some local factors", Bloomberg reported.