HKMA keeps base rate at 4% as US market slumps, fears the Fed is losing inflation fight

Shortly after the US Federal Reserve’s decision to maintain its benchmark rate, Hong Kong’s monetary authority follows suit The US stock market slumped on Wednesday with the Dow Jones down 1,152 points or 2.2 per cent, while the S&P 500 fell 1.5 per cent and Nasdaq dropped 1.7 per cent. The decline came after the bond market signalled the Federal Reserve could be failing behind on its inflation fight. “For some households, businesses ⁠and market ‌professionals, five years of high inflation have ⁠left a mistaken impression that is hard to shake – that the Fed’s implicit inflation target was somehow above 2 per cent,” Fed chairman Kevin Warsh said in a media briefing after hosting his second FOMC meeting. “Let me reiterate: there is no soft inflation target. There ⁠is no soft implicit target, not on this committee’s watch. There’s only a target, and it’s 2 per cent.” The Fed’s decision was widely expected, with 67.9 per cent of traders forecasting no change, while the rest expected a 25 basis point rate rise, according to CME FedWatch data based on Fed funds futures contracts on Wednesday. ⁠“No hike at this moment is slightly positive for Hong Kong’s real estate and stock market,” said Tommy Ong, the managing director of T.O.

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