Federal Reserve raises rates for first time in three years

From US Fed rates to China's global export share: 4 figures shaping markets

The US Federal Reserve delivered its first interest-rate increase in three years, lifting the benchmark rate by a quarter percentage point as central banks worldwide adjusted monetary policy and key bond yields retreated from multi-year highs.

Fed breaks three-year pause with rate hike

The US Federal Open Market Committee voted unanimously to raise rates by 25 basis points to a target range of 3.75 to 4.00 per cent, marking the central bank's first increase since 2023. Federal Reserve chief Kevin Warsh pledged to tackle inflation that had been "too high" for "too long", signalling the start of a tightening cycle after an extended period of unchanged policy.

The rate decision came alongside parallel moves by other major central banks, including the Hong Kong Monetary Authority and the Bank of Japan, pointing to coordinated efforts to address price pressures.

Treasury yield falls below critical threshold

The US 10-year Treasury yield dropped to about 4.94 per cent following the Fed's announcement, slipping below the psychologically significant 5 per cent level it had breached earlier in the week for the first time since 2023. The retreat suggests markets may have already priced in the policy shift or are anticipating slower growth ahead.

Hong Kong holds third place in global finance rankings

The Hong Kong Monetary Authority responded to the Fed by raising the city's base rate to 4.25 per cent, though the territory's three note-issuing banks, HSBC, Bank of China (Hong Kong) and Standard Chartered, kept their prime lending rates unchanged.

Hong Kong retained its status as Asia's top financial hub for a fourth consecutive edition of the Global Financial Centres Index, scoring 756 points across five main categories: business environment, human capital, infrastructure, financial sector development and market reputation. The city placed just one point behind London on 757, while New York topped the index with 761 and Singapore followed Hong Kong with 755.

Source: South China Morning Post