The Hong Kong Monetary Authority cut its key interest rate by 50 basis points in response to the decision of the US Federal Reserve to reduce the benchmark rate on Tuesday.
In light of the Fed's decision, the Hong Kong Monetary Authority adjusted downward the Base Rate by 50 basis points to 1.50 percent according to a pre-set formula, the HKMA said in a statement.
In an unscheduled meeting, the US Fed cut the rate by 50 basis points citing risks posed by the coronavirus to the US economic activity.
Eddie Yue, chief executive of the HKMA, said the action taken by the Fed indicates that the bank would proactively use its monetary policy to mitigate possible economic risks posed by the coronavirus.
"However, further developments of the coronavirus are still very uncertain and financial markets will continue to see considerable volatility," he added.
Further, he noted that other factors such as domestic funding demand and supply also influence Hong Kong dollar interest rates. He pledged to closely monitor market situation and maintain orderly operations of money and foreign exchange markets.