🇭🇰 Hong Kong Cuts Base Rate to 4.00%, But Banks Hold Their Rates
On December 11, 2025, the Hong Kong Monetary Authority (HKMA) lowered its Base Rate by 25 bps to 4.00%, marking the third rate cut of the year.
The move followed the latest U.S. Federal Reserve cut, as the Hong Kong dollar is pegged to the U.S. dollar.
🔍 Why HKMA Follows the Fed
Hong Kong’s Base Rate is set through a predefined formula linked to U.S. Fed Funds or HIBOR levels.
This mechanism ensures monetary stability under the USD peg, leaving HKMA little room for independent rate policy.
🏦 The Key Point: Banks Didn’t Cut Their Rates
Despite the Base Rate cut, major banks like HSBC, Bank of China (HK) and Standard Chartered kept:
lending rates unchanged (around 5.0%–5.25%)
deposit rates unchanged
Why?
Banks focus on funding costs, HIBOR levels and margins. With deposit rates already near zero, cutting loan rates further could squeeze profitability too much.
👉 Result: a macro rate cut, but slow transmission to the real economy.
🏠 Impact on Economy and Real Estate
Lower rates usually support consumption and property markets.
HKMA acknowledges this, but also warns that uncertainty remains high and encourages cautious financial planning.
📌 What to Watch Next
If the Fed pauses, Hong Kong will likely stay stable due to the peg.
A real drop in HIBOR and liquidity conditions would increase the chances of banks eventually passing cuts to mortgages and loans.
🪙 Why This Matters for Crypto
Lower rates often support a risk-on environment, but the key is pass-through:
if households and businesses don’t feel lower borrowing costs, the impact on risk appetite may be muted in the short term;
still, the signal is clear: Hong Kong’s financial system is operating in a U.S.-driven easing cycle.
Takeaway:
Policy is easing at the top, but real economic effects will depend on when — and if — banks follow.
