Hong Kong central bank keeps key rate unchanged, tracking Fed move

By Selena Li

HONG KONG, May 8 (Reuters) - The Hong Kong Monetary Authority (HKMA) left its base rate charged through the overnight discount window unchanged at 4.75% on Thursday, tracking a move by the U.S. Federal Reserve to keep rates steady.

Federal Reserve Chair Jerome Powell said on Wednesday "despite heightened uncertainty, the (U.S.) economy is still in a solid position", and the current stance of monetary policy leaves the Fed well positioned to respond in a timely way to potential economic developments.

HKMA said Hong Kong's monetary and financial markets have continued to operate in an orderly manner.

The market's de-facto central bank stepped into the foreign exchange market as the Hong Kong dollar hit the top end of its band for a fourth time this month, spurred by a broader selloff in the U.S. dollar against several low-yielding currencies.

"Going forward, Hong Kong dollar interbank rates will be affected by the supply and demand of Hong Kong dollar as well as the Hong Kong dollar liquidity condition and other factors, especially in the shorter tenors," HKMA said in a statement.

Hong Kong's monetary policy moves in lock-step with the United States as the city's currency HKD=D3 is pegged to the greenback in a tight range of 7.75-7.85 per dollar.

HSBC Holdings on Thursday said its best lending rate in Hong Kong remains unchanged at 5.25%, while Bank of China (Hong Kong) also said to keep Hong Kong dollar prime rate unchanged at 5.25%. (Reporting by Selena Li; Editing by Toby Chopra)

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