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BEA Projects CN Full-Yr Econ Growth at 4.6%, HK GDP to Grow 3.8%; Fed May Hike Rates Once This Yr
2026-06-24 17:03:12 Bank of East Asia forecast the economies of China and Hong Kong to continue their growth momentum in 2H26, with full-year growth projected at approximately 4.6% and 3.8%, respectively. Tristan Zhuo, Chief Economist of Bank of East Asia, said that after China’s economy expanded by 5% in 1Q26, growth moderated in 2Q. Although performance across different sectors diverges and the recovery remains uneven, full-year growth is still likely to achieve the 4.5-5% target range. Meanwhile, Hong Kong’s economic recovery foundation is further consolidated, with comprehensive expansion in imports and exports, domestic consumption and investment. The bank expected that under a stable inflation environment, the People’s Bank of China still has room to cut interest rates and the reserve requirement ratio (RRR). To support economic growth momentum, there is a chance of a 10 bps rate cut within the year, and a 25-50 bps reduction in the RRR is projected. On the other hand, the Federal Reserve has turned more hawkish and is expected to raise rates once by 0.25% this year, lifting the upper bound of the federal funds target rate to 4%. However, with Hong Kong’s best lending rate currently at a relatively low level, a brief Fed rate hike is unlikely to trigger a new tightening cycle, and the best lending rate in Hong Kong may remain unchanged. In contrast, HIBOR is more volatile, and expectations of a Fed rate hike will exert upward pressure on HIBOR. ~ AASTOCKS Financial News Website: www.aastocks.com | |