“But the external environment remains complicated and there are a lot of uncertainties,” Chan said in his weekly blog. “The US Federal Reserve last week held interest rates steady. Coupled with stubborn inflation, the market expectation for a rate cut has weakened compared with earlier this year.”
He said the conditions could “bring adverse impacts to global economic recovery, Hong Kong’s exports, as well as the sentiment of local investment and capital markets”.
The Fed announced last week it was holding its benchmark lending rate steady in the 5.25 per cent to 5.5 per cent range as core inflation remained above the target of 2 per cent.
Chan said the city’s tourism sector was one of the key drivers of the economy in the first quarter, but warned of the drawbacks of a strengthening Hong Kong dollar, which is pegged to the US dollar.
The number of arrivals for the first three days of the Labour Day “golden week” holiday reached nearly 650,000, up by 25 per cent…