The Hong Kong Monetary Authority maintained its base rate at 4.75% on Thursday, mirroring the US Federal Reserve's decision to hold rates steady.

Hong Kong's monetary policy aligns closely with that of the US as the city's currency is tightly pegged to the US Dollar within a range of 7.75 to 7.85 per Dollar.

“The policy decision is in line with market expectations. However, the pace of future rate cuts remains uncertain,” according to an HKMA statement published on Thursday. 

“Interest rates in Hong Kong might still remain at relatively high levels for some time, and the extent and pace of future US interest rate cuts are subject to considerable uncertainty,” HKMA went on to say.

The Federal Reserve kept interest rates unchanged on Wednesday, with Chair Jerome Powell emphasising that rate cuts would not be considered until inflation and employment data justified such a move, Reuters news agency reports.

This stance places Fed policy on pause amid a US economic environment that appears both stable and highly unpredictable, as the effects of President Donald Trump's policies remain uncertain.

“In Hong Kong, our financial and monetary markets have continued to operate in a smooth and orderly manner,” HKMA stated, going on to add that market liquidity has remained consistent, and the Hong Kong Dollar exchange rate has stayed steady.

Furthermore, the HKMA advised the public to handle interest rate risk when buying property, obtaining mortgages, or making other borrowing choices, the Reuters report goes on to say.

Last year, the HKMA implemented three rate cuts, with the most recent reduction of a quarter point in December.