Hong Kong follows Federal Reserve to keep base rate unchanged amid Middle East war

2026.03.18 23:20 The Hong Kong Monetary Authority maintained the city’s base rate at 4 per cent on Thursday. Photo: Jonathan Wong Hong Kong’s monetary authority kept its base rate unchanged after a similar move by the US Federal Reserve, as analysts said that the Middle East conflict has added to the uncertainty over the pace of rate cuts this year. The Hong Kong Monetary Authority (HKMA) maintained the city’s base rate at 4 per cent on Thursday. Hours earlier, the Fed also kept its target rate in the range of 3.5 per cent to 3.75 per cent, after the second meeting of the Federal Open Market Committee (FOMC) this year. “Near term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East,” Fed chairman Jerome Powell said in a media briefing after the FOMC meeting. “Higher energy prices will push up overall inflation,” he added, “but it is too soon to know the scope and duration of the potential effects on the economy.” The United States’ Dow Jones Industrial Average dropped 1.6 per cent after the rate decision. The Fed’s decision was widely expected, with 98.9 per cent of traders forecasting no change and the rest expecting a 25 basis point increase, according to CME FedWatch data based on Fed funds futures contracts on Wednesday. US Federal Reserve chair Jerome Powell’s term ends in May. Photo: AFP “While the decision aligns with market pricing and consensus forecasts, attention will turn to the lingering disconnect between inflation and employment dynamics, alongside potential spillovers from the Middle East conflict,” Allianz Global Investors’ chief investment officer for public markets, Michael Krautzberger, said on Tuesday. “The Middle East conflict now adds another layer of risk. If prolonged, stagflationary pressures could limit policymakers’ ability to ‘look through’ the renewed supply shock. History offers little precedent for easing amid significant

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