The city's central bank increased the cost of credit on Wednesday to maintain alignment with the US Federal Reserve's latest policy shift. Shares of local real estate developers declined following the announcement, triggering concerns that higher borrowing costs could disrupt a nascent recovery in the city's housing market. This action ends a pause in rate adjustments that had lasted for over two years.

The decision tracks a unanimous 12-0 vote by the US Fed to raise its benchmark rate by 25 basis points to a 3.75% to 4.00% range. Broad stock indices in Hong Kong fell after the Fed projected a median rate of 4.1% for 2026, while the Hong Kong Monetary Authority cautioned that a widening rate gap could pressure the local currency toward the weaker end of its exchange band.