The Hong Kong Monetary Authority has cut its benchmark interest rate today by half a percentage point to mirror the Fed’s base rate reduction from 2% to 1.5%.
The Fed’s move was two weeks ahead of its scheduled meeting on March 17 and 18, as Chairman Jerome Powell said he “saw a risk to the economy, and chose to act.”
In late February when announcing its budget for the year, the Hong Kong SAR government projected a record deficit for 2020 at US$17.89 billion to prevent the first back-to-back annual recessions on record.
Before the Fed’s rate cut announcement, Malaysia's central bank trimmed its key interest rate to the lowest in 10 years on Mar 3, as a move to mitigate the risk of the coronavirus outbreak.
Bank Negara Malaysia (BNM) lowered its overnight policy rate by 25 basis points to 2.5%, the second reduction to the rate this year after the cut of 25 basis points in January.
The Malaysian government also unveiled fiscal stimulus package — including a US$4.76 billion stimulus package, tax breaks and cash aid — to help businesses and households.
The coronavirus outbreak will weigh onMalaysia's economy, particularly in Q1, and pressure full-year growth as the Southeast Asian country continues to grapple with weakness in commodity-related sectors, said the central bank's monetary policy committee.
BNM reported economic growth of 3.6% for Q4 2019, Malaysia's weakest quarterly expansion since the global financial crisis 12 years ago. The country achieved a growth of 4.3% in 2019, the lower end of the central bank's forecast.
Australia's central bank has also slashed its benchmark rate to a record low earlier this week, and ahead of plans by the Group of Seven nations to work together to reduce the damage on the global economy from the coronavirus.
