The Hong Kong Monetary Authority kept its base rate unchanged at 4 percent on Thursday after a divided Federal Reserve decided to keep interest rates on hold even as US central bank chief Kevin Warsh pledged an unwavering commitment to bring inflation down.  

The Federal Open Market Committee of the United States Federal Reserve voted 9-3 to keep the target range for the federal funds rate unchanged at 3.5-3.75 percent.

“The policy decision is in line with market expectations. The statement released after the meeting indicated that economic activity was expanding at a solid pace and the labor market was stable, but inflation has remained elevated, reflecting that the committee is watchful over the outlook on inflation,” the HKMA said in a statement on Thursday.

The HKMA said US interest rate adjustments will depend on developments in inflation, labor market, and other economic data, and these may influence the interest rate environment in Hong Kong.

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“The public should carefully manage interest rate risks when making decisions about property purchase, investment or borrowing,” it added.

Under the Linked Exchange Rate System, Hong Kong dollar interbank rates generally track the US dollar counterparts, while shorter-tenor interbank rates tend to be also influenced by the supply and demand of Hong Kong dollar funding in the local market such as seasonal factors and capital market activities.

The widely expected Fed decision to leave policy on hold drew dissents from three of the 12 FOMC members who wanted a quarter-percentage-point hike instead.

With inputs from agencies