HK to halt rate cuts after 12.5 bps trim, Citibank says

Citibank projected that Hong Kong banks will pause further rate cuts after reducing the interest rate by 0.125 percentage points in the fourth quarter, after the local property market rebounded on the rate cut.

The lender said the three-month Hong Kong interbank offered rate will probably fall to 2.6 percent to 2.8 percent, with limited room for a rise.

It added that the US will have two rate cuts by 25 basis points this year and is expected to reduce the interest rate by 1 to 1.5 percentage points in 2026.

In addition, the US dollar may weaken further, which will benefit the overseas stock markets, with the US dollar index potentially dropping below 96 within the next three months, Citibank noted.

Conversely, the gold price will reach US$3,800 per ounce (HK$295,490), supported by factors like interest rate cuts, increasing gold reserves in central banks, and safe-haven demand, the bank said.