Fed Raises Rates for First Time in 3 Years: Loans Cost More

The US central bank raised interest rates this week for the first time since 2023, lifting its benchmark rate by a quarter of a percentage point to a range of 3.75 to 4.00 per cent. The vote was unanimous. Fed chief Kevin Warsh said inflation had been "too high" for "too long" and needs to be brought down. Hong Kong's Monetary Authority raised its base rate to 4.25 per cent in response, and the Bank of Japan followed too. But here's the good news for Hong Kong homeowners: the city's three big note-issuing banks — HSBC, Bank of China (Hong Kong) and Standard Chartered — left their prime lending rates unchanged, so local mortgage payments won't jump yet.

So what does this mean for your wallet? Interest rates are basically the price of borrowing money. When the Fed raises them, everything you borrow against gets a little more expensive: credit card balances, car loans, and variable-rate mortgages. On the flip side, savings accounts and certificates of deposit tend to pay slightly more. One number worth watching is the 10-year US Treasury yield, which fell back below 5 per cent this week to about 4.94 per cent. That number quietly sets the tone for 30-year US mortgage rates, so its dip is a small relief for anyone house-hunting.

Globally, Hong Kong kept its ranking as Asia's top financial hub and the world's number three, scoring 756 points in the Global Financial Centres Index. That's just one point behind London (757) and within five of New York (761), with Singapore one spot below at 755. The index weighs things like business environment, workforce talent, infrastructure and reputation — the qualities that attract banks, law firms and jobs to a city.

Finally, Goldman Sachs projects a sharp rise in the share of global exports coming from Chinese firms. In plain terms: more of the world's manufactured goods — phones, cars, appliances — are likely to be made and sold by Chinese companies. That could mean cheaper prices for shoppers, but tougher competition for factories and workers in other countries. The catch with all of this: one rate hike doesn't fix inflation overnight, and changes take months to reach your monthly bills. If prices stay hot, more hikes could come.