The government will maintain its full-year economic growth forecast at 2–3 percent this year, Financial Secretary Paul Chan Mo-po said, noting that external risks outweighed rate cuts.
While interest rate cuts will support businesses and homeowners, external factors such as tariffs and US protectionist policies remain beyond Hong Kong’s control, Chan said at a press conference following the Policy Address.
He added that although Hong Kong’s interest rate trend is closely tied to the US due to the currency peg, the city does not always follow US rate moves in lockstep, with adjustments depending on local liquidity conditions.
He said the prolonged high-interest environment is now giving way to a more accommodative outlook, but the pace and scale of rate cuts will hinge on global developments.
He also said it is natural for Hong Kong to settle part of its goods imports from the mainland in yuan, after the government indicated it may settle expenditure in the Chinese currency in the future.
Chan highlighted that Hong Kong hosts the world’s largest offshore yuan pool, exceeding 1 trillion yuan (HK$1.1 trillion), which requires both investment opportunities and hedging tools for currency and interest-rate risks.
This, Chan said, is where Hong Kong can play a unique role.
The Policy Address sets out plans to position the city as an international financial center with a yuan advantage, while outlining that the government will issue more yuan bonds and consider settling government expenditure in yuan under suitable circumstances.
Chan said the authorities have included the yuan-denominated bonds in the bond offerings in recent years.
