Hong Kong’s largest lender, HSBC anticipates six more rate cuts in the US, significantly reducing funding costs and positively impacting the local economy and markets, according to HSBC Hong Kong CEO Luanne Lim.

The Federal Reserve, which reduced its key rate by 0.5 percentage points on 18th September, is expected to implement six more 25-basis-point cuts at each of its meetings until June, with the next cut anticipated on 7th November, according to HSBC Global Research. By June, the Fed's rate target range could drop to between 3.25% and 3.50%.

HSBC became the first bank in Hong Kong to lower its prime lending rate and savings deposit rate by 25 basis points just hours after the Fed’s decision, South China Morning Post reports.

Other leading local banks soon followed, marking an unusual instance where domestic banks immediately adjusted their rates in line with the Hong Kong Monetary Authority, which mirrors the Federal Reserve, instead of waiting several months as was typically the case.

“The market considered our rate cut to be a surprise because of past behaviour,” the CEO of HSBC Hong Kong, said in an interview on Friday.

She added that HSBC had contemplated a rate cut before last month’s Fed meeting “based on the macro economy, the level of interbank rates, and our cost of funding.

"It is a purely commercial decision. The public should not expect that we will always immediately cut interest rates after every US rate cut in the future, as the situation will be different every time. HSBC needs to adopt an agile and flexible approach in our rate cut decisions in future,” Lim added.

Furthermore, the CEO noted that the bank's clients have embraced the rate cut, as the reduced funding costs are expected to help boost the city's economic recovery.