The Hong Kong Monetary Authority (HKMA) left the base rate charged through the overnight discount window the same at 5.75% on Thursday, tracking the Federal Reserve's move to keep rates steady.

HSBC, the city's largest bank, also said it maintained its prime rate unchanged at 5.875%.

The Fed left interest rates unchanged on Wednesday, with Fed Chair Jerome Powell stating the monetary policy tightening has likely reached an end as inflation falls faster than forecast.

In addition, he said talks of cuts to borrowing costs are coming "into view."

According to the Hong Kong Monetary Authority, the market understood the Federal Reserve's rate decision as interest rates being close to their peak, with marginally larger cuts in 2024 than previously forecast.

"There remains uncertainty in the interest rate path, and the high-interest rate environment may last for some time," said a HKMA statement, adding Hong Kong's financial and monetary markets are still operating in a smooth and orderly manner, Reuters reports.

"The Hong Kong Dollar exchange rate remains stable, and the Hong Kong Dollar interbank rates might remain high for some time," HKMA stated, urging people to be prudent of the associated risks in relation to property purchases, mortgages or other borrowing.

Moreover, a senior banking partner at KPMG China, Paul McSheaffrey, is of the opinion a rate cut may not happen soon.

"No increase in the Fed rates perhaps indicates that we may have reached the top of the interest rate cycle. However, I don't think this should be taken as a sign that rates will fall in the short term. The Fed will want to ensure they really have got inflation under control before reducing rates."

Hong Kong's monetary policy moves in lockstep with the US as the city's currency is pegged to the dollar in a tight range of 7.75 to 7.85 per dollar.

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