Hong Kong’s Interest Rates Dip in April—Because Even Banks Need a Break Sometimes

Hong Kong’s composite interest rate edged downward in April 2025—because apparently even financial hubs need to catch their breath. The dip, while slight, signals a momentary pause in the relentless grind of monetary policy.

Why it matters: When the cost of money twitches, wallets worldwide shudder. This isn’t just local news—it’s a pulse check on global liquidity.

The cynical take: Somewhere, a banker just sighed and adjusted their yacht budget. Meanwhile, crypto traders barely glanced up from their charts—volatility makes these micro-moves look like flatlines.

The Hong Kong Monetary Authority (HKMA) has announced a decrease in the composite interest rate to 2.02% at the end of April 2025, down from 2.07% in March 2025. This marks a reduction of 5 basis points, primarily attributed to declines in the weighted funding cost for deposits, as per the HKMA’s recent press release.

Understanding the Composite Interest Rate

The composite interest rate serves as a measure of the average cost of funds for banks, encompassing a weighted average interest rate of all Hong Kong dollar interest-rate-sensitive liabilities. These include customer deposits, amounts due to banks, negotiable certificates of deposit, and other debt instruments. The data is derived from retail banks, which hold approximately 90% of the total customer deposits in the banking sector.

It is important to note that while the composite interest rate reflects average interest expenses, it does not account for other loan-related costs such as operating, credit, and hedging expenses. Since June 2019, the calculation of this rate has been based on the local ’Interest rate risk in the banking book’ (IRRBB) framework, which means current figures may not be directly comparable with those of previous months.

Historical Context and Data Availability

For those interested in historical trends, the HKMA provides data on the composite interest rate dating back to the fourth quarter of 2003. This information is accessible through the Monthly Statistical Bulletin available on the HKMA’s website.

For the original announcement and further details, the HKMA’s press release can be accessed here.

The announcement comes amid ongoing discussions about interest rate trends and their implications for the banking sector in Hong Kong, highlighting the importance of monitoring these metrics as economic conditions evolve.

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