Hong Kong braces itself for Fed-induced money flows

Bloomberg reports that Norman Chan, the head of Hong Kong’s central bank, is preparing to take additional tightening steps to prevent additional Federal Reserve monetary easing from adding to Hong Kong’s inflationary pressures:

“The U.S. Federal Reserve’s expansion of stimulus will add to the risk of a housing bubble in Hong Kong and may force extra measures to cool prices…”

“The Hong Kong Monetary Authority will take measures that are specific to the housing market if necessary…The risk of an asset bubble in Hong Kong’s property market is rising.”

It must seem odd to monetary authorities on this side of the Pacific that a central bank is trying to get ahead of a property bubble and not just plan for clean-up duty after it bursts. Since August, Hong Kong’s authorities have “…raised down-payment ratios, stopped offering residency to foreigners who buy property in the city, and increased land auctions to boost supply.” Despite these measures, sales of news homes still doubled in October.

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