Timing, pace of Fed rate rise still in air: Hong Kong financial chief

Hong Kong Financial Secretary Tsang Chun-wah said here Thursday that the U.S. economy has shown encouraging signs, but there are still quite a number of question marks and there is much speculation over the timing and pace of the Fed rate rise.

Delivering his speech at a luncheon on Wednesday, Tsang said U. S. Federal Reserve chair Janet Yellen's statement last night did not make the position any clearer than before.

She was rather emphatic in clarifying that removing the word " patient" did not mean that the Fed had now become impatient, Tsang said.

"We should await the outcome of the next meeting and continue to discuss whether or not the rise in interest rates will indeed slow U.S. recovery and impact on the rest of the world," he said.

Tsang also said there are also concerns about the recovery progress, or more precisely, the lack of recovery progress, of the economies of Europe and Japan. Indeed, they may well be falling into the black hole of a deflation.

As for the Chinese mainland economy, he said, compared to other large economies, it is rather healthy, but it, too, faces downward pressures this year.

The financial chief mentioned that the recent rise in terrorist attacks and the persistent geopolitical tensions in various corners of the world add to global doubt.

"While the plummeting oil prices should in general lower costs and enhance consumption, benefiting, in particular, net energy importers like Hong Kong and the mainland, persistently low oil prices may well blunt the economies of oil-exporting nations. And that can only further undermine global financial stability," he said. Endi