Press Releases in Hong Kong

HK watchdog urges caution after US Fed votes to taper

In this Oct 24, 2008 photo, a pedestrian walks past the building housing Hong Kong Monetary Authority's office in Hong Kong. (TED ALJIBE / AFP)

HONG KONG – The Hong Kong Monetary Authority on Thursday urged vigilance against potential market risks after the US Federal Reserve announced a plan to taper its asset purchases later this month.

"Due to uncertainty on the US inflation and interest rate outlook, the public should stay vigilant as regards potential market volatilities and risks," the HKMA said in a short response to a key meeting of the Federal Open Market Committee, the Fed's policy-making committee on Wednesday local time.

While highlighting caution, the Hong Kong Monetary Authority offered assurances that Hong Kong's money markets continue to operate smoothly, with ample liquidity in its banking system, while the Hong Kong dollar exchange rate and interest rates remain steady

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The announcement of tapering came as US inflation rates remained elevated in recent months. In the 12 months through September, the core personal consumption expenditure price index, the Fed's preferred inflation measure, rose 3.6 percent for a fourth straight month, remaining at the highest level since May 1991, according to the US Commerce Department.

While highlighting caution, the HKMA offered assurances that Hong Kong's money markets continue to operate smoothly, with ample liquidity in its banking system while the Hong Kong dollar exchange rate and interest rates remain steady.

The watchdog vows to continue to monitor market developments and maintain monetary and financial stability in accordance with the Linked Exchange Rate System, which pegs the exchange rate of the Hong Kong dollar to the US dollar.

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