Hong Kong's de facto central bank today raised its base interest rate after the US Federal Reserve announced its first rate increase in more than nine years in a landmark move signaling the US has finally moved beyond the 2008 crisis.
The decision had repercussions across the global financial system, while imprinting Janet Yellen's personal stamp on US monetary policy after nearly two years as Fed chair spent plotting to reverse course from the easy-money stance bequeathed by predecessor Ben Bernanke.
The Hong Kong Monetary Authority said Thursday it had adjusted its base rate upwards by 25 points to 0.75 percent.
"The increase in the base rate follows the 25-basis point upward shift in the target range for the US federal funds rate," the authority said in a statement.
Hong Kong has maintained a decades old peg with the US dollar, which keeps Hong Kong at the mercy of Fed policymakers.
The city's dollar was linked to the greenback in 1983 in a bid to prevent a sell-off as it wobbled over fears about China's reunification talks with Britain.
The Fed raised its benchmark federal funds rate, locked near zero since the financial crisis, by a quarter point to 0.25-0.50 per cent, saying the world's biggest economy is growing solidly and should accelerate next year to a respectable 2.4 per cent pace.
The move was widely expected and marked the end of an era in which the Fed pumped trillions of cheap dollars into the devastated US economy to fuel what turned out to be an unexpectedly long rebound.
