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Hong Kong kept its key interest rate unchanged for a sixth consecutive time in lockstep with the Federal Reserve’s overnight decision, with sticky US inflation forcing investors to delay rate cut bets.
The number of Hongkongers with negative-equity loans stood at 32,073 in the first quarter of the year, tripling from the previous quarter and the most since some 40,000 cases were recorded in the first quarter of 2004.
Analysts expect the Federal Reserve to start cutting interest rates next year, with one expecting the first salvo in March. Lower rates would benefit Hong Kong’s property and capital markets, and boost the yuan, they said.
Hong Kong home prices are expected to fall by up to 5 per cent by the end of this year, analysts say, after seven major lenders said they will raise their mortgage rates as early as Monday. HSBC, Standard Chartered and Bank of China are among lenders who said borrowers will have to pay more for home loans.
The Hong Kong Monetary Authority, the city’s de facto central bank, has issued the result of its first climate risks related stress test conducted on 27 banks, and found that flooding and typhoons represented a major risk for the lenders.
The one-month Hibor, at 0.064 per cent on Monday, was already at its lowest since January 2010, according to data provided by the Hong Kong Association of Banks. It was also a hair’s breadth away from the record low of 0.05 per cent recorded in December 2009.