Record of discussion of meeting of Exchange Fund Advisory Committee Currency Board Sub-Committee held on October 30
The following is issued on behalf of the Hong Kong Monetary Authority:
(Approved for Issue by the Exchange Fund Advisory Committee on November 29, 2024)
Report on Currency Board Operations (June 26 – October 18, 2024)
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The Currency Board Sub-Committee (Sub-Committee) noted that the Hong Kong dollar (HKD) traded within a range of 7.7644 – 7.8146 against the US dollar (USD) during the review period. The HKD exchange rate was largely stable between late June and late July before strengthening in early August, driven by the unwinding of carry trades and short HKD positions against the concerns of a possible US recession and expectation of faster and deeper US Fed rate cuts. The HKD further strengthened, supported by equity-related demand as local stock market sentiment improved following a series of economic stimulus measures announced on the Mainland in late September. HKD interbank rates (HIBORs) continued to track the USD rates while also being affected by local supply and demand. Short-term HIBORs tightened in late September due to buoyant equity market and seasonal quarter-end funding demand. In view of the pick-up of payment flows as the capital market turned vibrant, the HKMA temporarily extended the operating hours of the Real Time Gross Settlement (RTGS) systems for several days as precautionary measures, allowing more time for banks to process payments and manage funding for client flows in late hours. Following the decrease in the target range for the US federal funds rate in mid-September, many banks reduced their Best Lending Rates by 25 basis points, and the Best Lending Rates in the market ranged from 5.625 per cent – 6.125per cent at the end of the review period. The Convertibility Undertakings were not triggered and the Aggregate Balance was stable at around HK$45 billion. No abnormality was noted in the usage of the Discount Window. Overall, the HKD exchange and interbank markets continued to trade in a smooth and orderly manner.
The Sub-Committee noted that the Monetary Base increased to HK$1,938.33 billion at the end of the review period. In accordance with the Currency Board principles, all changes in the Monetary Base had been fully matched by changes in foreign reserves.
The Report on Currency Board Operations for the review period is atAnnex.
Monitoring of Risks and Vulnerabilities
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The Sub-Committee noted that global financial markets experienced a bout of volatility in early August, triggered by concerns over recession risks in the US and an unwinding of the popular carry trades funded by the Japanese yen. While short-lived, the turmoil showed that crowded market positions could be vulnerable to sudden unwinding. Amid more visible signs of cooling labour markets, the Fed and the European Central Bank eased monetary policy and left the door open to more rate cuts ahead, but their interest rate outlook remained clouded by the sluggish services disinflation and recent rising geopolitical tensions in the Middle East.
The Sub-Committee noted that overall economic growth in Mainland China slowed to 4.6per cent year on year in Q3. In particular, housing market activities and sentiment remained sluggish in September despite destocking efforts, which together with heightened global trade policy uncertainty, had weighed on the near-term economic growth outlook. Since late September, the authorities announced a broad stimulus package, and the immediate impact was largely positive. The Asia Pacific region mostly registered solid growth in the first half of 2024 and remained stable in face of the market turmoil in August with little signs of financial dislocation. The region as a whole was expected to continue to grow at a steady pace in the near term, although the region’s resilience would likely continue to be tested by various headwinds, such as still-high global interest rates and elevated trade policy uncertainty in the near term, as well as geoeconomic fragmentation over the longer term.
The Sub-Committee noted that in Hong Kong, economic activities continued to grow at a moderate pace, mainly driven by the strong growth in goods exports alongside robust external demand and the ongoing global tech cycle recovery. Inbound tourism also recovered steadily, but the local retail and catering sectors continued to face headwinds from changing consumption patterns of both local residents and inbound tourists. Looking ahead, Hong Kong's Gross Domestic Product growth momentum was expected to remain moderate in the remainder of the year, with the outlook clouded by various risks and uncertainties stemming from the US policy rate path, global growth prospects, rising trade tensions and the upcoming US presidential election. Meanwhile, sentiment in the residential property market had improved following the interest rate cut, although the commercial real estate markets remained subdued especially in the office segment.
Latest Monetary Policy Implementation Framework in Major Advanced Economies
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The Sub-Committee noted a paper that studied the implications of the changes in the monetary policy implementation framework and reserve regimes in major advanced economies.
CFS to follow up certain batches of powdered infant and young children formula with possible presence of Cereulide produced by Bacillus cereus
The Centre for Food Safety (CFS) of the Food and Environmental Hygiene Department (FEHD) today (January 10) said that, it took initiative to meet with Nestlé Hong Kong again today, and confirmed the company's today announcement of an additional batch of powdered infant and young children formula suspected to have possibly used the raw material concerned. Nestlé Hong Kong has voluntarily stopped sales, removed from shelves the affected products and has initiated a precautionary recall. The CFS has collected samples of powdered infant and young children formula from the market for Bacillus cereus testing, the test results so far were satisfactory. The Environmental and Ecology Bureau is also closely monitoring the supply situation of other formula milk powder and maintaining communication with other major suppliers. It is noted that there is sufficient formula milk powder to meet the demand.
The spokesman said, the CFS has been actively following up on Nestlé company's voluntary and precautionary recalls of certain batches of its powdered infant and young children formula in certain areas in Europe due to possible presence of Cereulide produced by Bacillus cereus in the individual raw material. According to the latest information from Nestlé Hong Kong today, an additional batch of its powdered infant and young children formula imported into Hong Kong might have used the raw material concerned. The CFS had earlier enhanced surveillance in the market and collected a sample from the above batch for testing of Bacillus cereus. The test result of the sample was satisfactory. Nevertheless, as a precautionary measure, Nestlé Hong Kong has voluntarily stopped sales, removed from shelves the affected products and has initiated a precautionary recall.
Product details are as follows:
Product name (Net weight): NAN PRO 1 2 HMO (800g)
Batch number: 51670742F2
Best-before date: June 16, 2027
Place of Origin: Germany
"The CFS met Nestlé Hong Kong again today, urging them to properly handle the product recall issue and respond to public enquiries, in order to safeguard consumers' legitimate rights and interests. In addition, the CFS and Nestlé Hong Kong have jointly followed up, six suspected affected batches of infant and young children formula products that had not entered the market were marked and sealed. An additional 15 batches are currently en route to Hong Kong and will also be marked and sealed upon arrival. The CFS will continue to closely monitor the recall matters and remain fully committed to ensuring food safety, " the spokesman said.
Nestlé Hong Kong has initiated a recall of the affected batches of the products concerned. For enquiries about the recall, members of the public may contact the company through the following channels:
Consumer services hotline: 2599 8874 / 2797 6031/ 2179 8136 (Monday to Sunday, 9am to 9pm)
Email: consumerservices@hk.nestle.com
WhatsApp: 5283 4139 (NESTLÉ® NAN®) / 2599 8871 (Wyeth® Nutrition)
Online form: forms.office.com/e/BhqMhWfsUG?origin=lprLink
Consumers may choose to bring along the products (brand new or opened) for refund at place of purchase, or at exclusive service counters of Nestlé Nutrition Services from January 13 (Tuesday) onwards, to settle the recall and refund of the batches of the products concerned. Details of the exclusive service counters are as follows:
Kowloon Services Counter
Address: G/F, Park Hovan Commercial Building, 18 Hillwood Road, Tsim Sha Tsui, Kowloon (MTR Jordon Station Exit D)
Contact number: 3996 8196
Office hour: Monday to Saturday, 11am to 7.30pm; Sunday, 1pm to 5.30pm (except public holidays)
Hong Kong Services Counter
Address: 1/F, Ka Nin Wah Commercial Building, 423-425 Hennessy Road, Hong Kong (MTR Causeway Bay Station Exit B)
Contact number: 3996 8197
Office hour: Monday to Saturday, 11am to 7.30pm (except Sundays and public holidays)
The CFS, through its Food Incident Surveillance System, noted earlier that certain batches of Nestlé powdered infant formula were being voluntarily recalled in Europe due to possible contamination with Bacillus cereus. Upon learning of the incident, the CFS has immediately initiated follow up actions, published food incident posts to inform the public and the trade about the issue, and has been actively following up on the incident and enhanced surveillance.
Over the past three days (as of 4pm on January 9), the FEHD received a total of 18 food complaints and enquiries suspected to be related to the infant and young children formula products, including one anonymous complaint without contact information. The CFS and the Environmental Hygiene Branch have promptly followed up on all cases, including contacting the parties concerned to obtain details and collecting samples for testing. In addition, the CFS has referred the cases to the health department for follow-up. At present, no food poisoning cases related to the formula have been recorded.
Bacillus cereus is commonly found in the environment. Unhygienic conditions in food processing and storage may give rise to its growth. Cereulide is a heat-stable toxin produced in food by some strains of Bacillus cereus. Consuming food contaminated with excessive Bacillus cereus or its heat-stable toxins may cause gastrointestinal upset such as vomiting and diarrhoea.
The spokesman urged members of the public not to let infants and young children consume the affected batches of the products, and to seek medical treatment for infants or young children who felt unwell after taking the products concerned. The trade should also stop using or selling the affected batches of the products immediately.
"The CFS continues to closely monitor the developments of the situation, follow up and take appropriate action," the spokesman said.
Source: AI-found images
