HONG KONG - The Hong Kong Monetary Authority (HKMA) on Thursday cut its base rate charged via the overnight discount window by 50 basis points to 5.25 percent, tracking a move by the US Federal Reserve.

Hong Kong's monetary policy moves in lock-step with the United States as the city's currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar.

"In Hong Kong, our financial and monetary markets have continued to operate in a smooth and orderly manner. Market liquidity condition has remained stable with the Hong Kong dollar exchange rate hovering within the convertibility zone," HKMA Acting Chief Executive Howard Lee Tat-chi told reporters.

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"The rate cut cycle has just begun, interest rates will remain at relatively high level in the foreseeable future. The public should carefully access and continue to manage the interest rate risk when making property purchase, mortgage or other lending decisions," Lee added.

On Wednesday, the US central bank kicked off an anticipated series of interest rate cuts with a larger-than-usual half-percentage-point reduction and policymakers see another 50 basis points of cuts in 2024.

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"Following the 50-basis point downward adjustment in the target range for the US federal funds rate on 18 September (US time), 50 basis points above the lower end of the prevailing target range for the US federal funds rate is 5.25 percent, while the average of the five-day moving averages of the overnight and one-month HIBORs is 3.21 percent. The Base Rate is therefore set at 5.25 percent according to the pre-set formula," HKMA said in a statement.

Hong Kong Interbank Offered Rate (HIBOR) represents the cost of interbank lending in Hong Kong in Hong Kong dollars.

With Reuters inputs