The Hong Kong Monetary Authority (HKMA) cut its base interest rate for the first time since 2020 after the Federal Reserve (Fed) eased policy, in a move that should help loosen borrowing conditions in the financial hub.

The HKMA lowered rates by a half percentage point to 5.25% Thursday from the highest level since 2007. The authority follows the Fed in lockstep as the city has a currency peg to the greenback.

That mirrored the Fed’s own move hours ago to cut rates, though Chairman Jerome Powell cautioned against assuming the half-point reduction sets a pace that policymakers would continue.

Even so, traders ramped up bets on the pace of future US rate cuts. The market is now pricing in another 70 basis points worth of rate reductions at the Fed’s two remaining meetings this year.

The cut in Hong Kong will be welcome relief for businesses and consumers, who have faced years of steep borrowing costs. That’s also been one of the biggest drags on economic growth and the beleaguered real estate market, where prices have fallen to the lowest since 2016.

HSBC Holdings plc, the city’s largest lender, and peers usually announce their best lending rate later in the day following the HKMA rate decision. If it cuts, it would be the first policy easing from HSBC since 2019.

While the Fed rate cut kicks off a global rate cutting cycle, the move isn’t likely to spur an immediate reaction across Asia, as central banks in the region pivot to focus more on financial stability and other risks.

The Bank of Japan is expected to keep borrowing costs unchanged on Friday.

  - Bloomberg