Hong Kong Economy in Deep Water as Interest Rates Rise in Tandem With China and US Markets

Analysts believe that the economic correlation between Hong Kong and China makes it difficult to keep up with the European and American markets. Following the US interest rate hike will sacrifice some of Hong Kong's economic growth, primarily in the property market. However, the linked exchange system gives HKD the monetary stability that emerging markets in the world want. To a certain extent, it stops the market from crashing. Sung Pi-Lung /The Epoch Times

The economy has been tense all over the world due to fuel and gas price increases, the ongoing war between Russia and Ukraine, and rampant inflation. In response to the high domestic inflation, the U.S. Federal Reserve increased the interest rate five times this year. Since Hong Kong’s system depends on the linked exchange rate to the U.S. dollar, Hong Kong had to follow suit.

However, the situation in Hong Kong differs from that in America. The interest rates have to climb even though the composite consumer price index has increased by only 1.9 percent.