Hong Kong's central bank cuts interest rate after Fed move

Credit: REUTERS/BOBBY YIP

The Hong Kong Monetary Authority (HKMA) lowered its base rate charged through the overnight discount window by 25 basis points to 2% on Thursday, hours after the U.S. Federal Reserve delivered a cut of the same size.

Adds details of latest HK economic conditions

HONG KONG, Oct 31 (Reuters) - The Hong Kong Monetary Authority (HKMA) lowered its base rate charged through the overnight discount window by 25 basis points to 2% on Thursday, hours after the U.S. Federal Reserve delivered a cut of the same size.

Hong Kong's monetary policy moves lock-step with the United States' as the city's currency HKD=D3 is pegged to the greenback at a tight range of 7.75-7.85 per dollar.

The market had expected the U.S. central bank to cut for a third time in a row amid slowing global growth and the protracted U.S.-China trade war.

Thursday's cut comes after five months of often violent anti-government protests in Hong Kong. The city is facing its first recession in a decade.

The city's embattled leader Carrie Lam said on Tuesday she expects the Asian financial hub's economy to contract for the full 2019 year, with the protests hampering business and a Sino-U.S. trade war taking a toll on factory activity.

HKMA had earlier this month cut the amount of cash that banks must keep as reserves, releasing an extra HK$200-300 billion ($25.50-38.24 billion) into the broader economy which has been hit by protests and the Sino-U.S. trade war.

(Reporting by Donny Kwok and Noah Sin; Editing by Shri Navaratnam)

((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters Messaging: donny.kwok.reuters.com@reuters.net))

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