Protest-hit Hong Kong announces rate cut

By Riyaz ul Khaliq

ANKARA (AA) - Hong Kong's financial regulator has cut interest rate for the first time since 2008, while anti-government protests continue, local media reported on Thursday.

"The city’s de facto central bank [Hong Kong Monetary Authority or HKMA] has cut the base rate by 25 basis points to 2.5 per cent effective Aug. 1," the South China Morning Post reported.

The decision came soon after the U.S. Federal Reserve also announced an interest rate cut on Wednesday, for the first time since the 2008 Global Financial Crisis.

The HKMA has run its monetary policy in sync with the U.S. Federal Reserve since 1983.

The autonomous region, under China’s control since 1997, has witnessed unprecedented protests since early June against the local government’s move to legalize extradition of suspects to mainland China, Macao and Taiwan.

After intense public pressure and mass demonstrations, Carrie Law, chief executive of the government, declared the proposed measure "dead" but has yet to formally withdraw it, added the news article.

The global business hub's economy has contracted 0.3% in the second quarter this year compare to the first quarter amid the U.S.-China trade war, the report said.

"The U.S. rate cut shows that the Federal Reserve has reversed its interest rate normalization process that started in December 2015," Norman Chan Tak-lam, chief executive of HKMA, said at a media briefing.

However, the ongoing protests for the past two months "did not see capital outflow", he added.