Hong Kong Holds Base Rate at 4% After Fed Decision

The Hong Kong Monetary Authority kept its base rate unchanged at 4.0% on March 19, 2026, in lockstep with the Federal Reserve, which earlier held its target range at 3.00%–3.75%. The decision reflects Hong Kong’s strict alignment with the U.S. under the Linked Exchange Rate System, where the local dollar is pegged at 7.75–7.85 to the greenback, causing domestic rates to largely mirror U.S. monetary policy regardless of local conditions. Analysts noted that ongoing tensions in the Middle East have heightened uncertainty over the timing and pace of potential rate cuts this year. Despite the steady policy stance, Hong Kong’s economy has shown resilience. Annual GDP growth accelerated to a two-year high of 3.8% in Q4 2025, supported by firm household consumption, solid trade performance, and continued recovery in inbound tourism, suggesting underlying momentum remains intact even as external risks persist.