HK Monetary Authority expects to see U.S. rate hike this year

Chief Executive of the Hong Kong Monetary Authority Norman Chan said on Wednesday that the U.S. Federal Reserve is expected to raise interest rates soon.

Speaking to the media after a forum in Hong Kong, Chan said even if the rate hike will not begin this month, there is still a high probability for the Fed to raise rates later in the year.

The U.S. Federal Reserve's rate decision will come out after midnight this Friday at Hong Kong time.

Chan expected that capital outflows will appear in Hong Kong as the U.S. interest rates normalize, but said such process is normal and necessary.

He was pessimistic about this year's performance of exchange fund investment, as the stock market was volatile in the first half of the year, together with the continued strength in the U.S. dollar.

Chan reiterated that the authority has no intention to change the linked exchange rate system, which is suitable for Hong Kong, an open economy.

Talking about RMB, Chan said the authority has liquidity support measures to deal with the decrease in RMB deposit in Hong Kong, which can help to facilitate interbank pricing.

He noted that Hong Kong has to consolidate its leading position in RMB business as other international cities will gradually enjoy the policies of RMB internationalization and Hong Kong's advantages will no longer exist. Endi