US Fed Hikes to 3.75-4%, HK Banks Hold Prime Rate as Experts Split on Housing Outlook
Crhk · 6 SOURCES1 day ago2 MIN
Summary
The US Federal Reserve raised interest rates by 25 basis points to a 3.75%-4% target range on September 17, 2026, marking its first rate increase since July 2023 in a unanimous 12-0 vote. Fed Chair Kevin Warsh cited persistently elevated inflation across multiple categories, while President Trump publicly urged the central bank to cut rates to 1% or lower, describing the move as regrettable. Hong Kong's monetary authority raised its base rate to 4.25%, but major banks including HSBC opted to maintain their prime rates at 5%, signaling resilience in the local banking system.
Key Points
- The Federal Open Market Committee voted 12-0 to raise the federal funds rate by 0.25% to 3.75%-4%, the first increase since July 2023, with the dot plot showing a median year-end forecast of 4.125%
- Fed Chair Kevin Warsh stated that US inflation remains too high and has persisted for too long, noting that numerous price categories showed increases exceeding 3% over both 6-month and 12-month periods
- President Trump criticized the decision on social media, asserting that US rates should be 1% or lower given America's "best-in-the-world" credit standing, and expressed disappointment over the outcome
- Hong Kong's three note-issuing banks maintained their prime rates at 5%-5.5%, with industry experts citing the 1-month Hibor at approximately 2.9%, below the prevailing 3.25% mortgage cap
- Property analysts warn of potential 2-3% price corrections in the secondary market if the Fed delivers another hike by year-end, though strong rental demand and Hong Kong's safe-haven status may cushion the broader impact
Why It Matters
The divergence between Fed tightening and Hong Kong bank resilience reflects the territory's robust liquidity position and stable interbank rates, giving local borrowers temporary relief despite external pressure. However, with another Fed hike possible before year-end, prospective homebuyers should factor in rate uncertainty when budgeting mortgage payments, particularly if Hong Kong lenders eventually pass on increases through higher prime rates or reduced cashback offers .
The divergence between Fed tightening and Hong Kong bank resilience reflects the territory's robust liquidity position and stable interbank rates, giving local borrowers temporary relief despite external pressure. However, with another Fed hike possible before year-end, prospective homebuyers should factor in rate uncertainty when budgeting mortgage payments, particularly if Hong Kong lenders eventually pass on increases through higher prime rates or reduced cashback offers .