Macao’s lowering of its interest rates yesterday by 50 base points to 5.25 percent is expected to have a positive impact on the local economy, according to experts who spoke to TDM.
The chairman of the Macau Economic Association (MEA), Lao Pun Lap, told the broadcaster that the drop will gradually improve the investment sentiment and consumer demand, as “everyone will think we have entered a cycle of interest rate cuts.”
Samuel Tong Kai Chung, the president of the Macau Institute of Management (MIM), was similarly optimistic, saying the cuts would benefit the property market and promote consumption. The economist expects the US to continue cutting its interest rates over the next one or two years, which would give Macao’s economy and investment climate another boost.
The co-head of Standard Chartered’s treasury markets, Mackie Lau, meanwhile told Hong Kong media that he anticipates the Federal Reserve Bank will make another 0.5 percentage point cut to the US interest rate in November.
[See more: Macao and Hong Kong lower their interest rates to 5.25 percent]
Both Macao and Hong Kong announced a reduction to their interest rates yesterday after the Washington lowered its rates by 0.5 percent on Wednesday for the first time in four years, bringing the figure down to a range between 4.75 and 5 percent.
The move by the two SARs to follow the US lead stems from the pegging of Hong Kong’s currency to the US dollar, and the linking of Macao’s patacas to the Hong Kong dollar in turn.
The US cuts are expected to have consequences for the domestic and global economy, with Scott Wren, a Wells Fargo global market strategist telling CBS that the measure “should have a positive effect on the economy and markets in 2025.”
He added that “we believe the global economy is likely to benefit as well, as major central banks around the world have already cut rates or are on the verge of doing so.”
