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Which of the following statements about Hong Kong's monetary policy are CORRECT? I. Its objective is a stable exchange rate against the US dollar. II. The Financial Secretary sets the objective. III. The Monetary Authority chooses the strategy and instruments. IV. The HKMA sets interest rates to hit an inflation target.
Statement I is correct: the HKMA states that Hong Kong's monetary policy objective is a stable external exchange value of the Hong Kong dollar against the US dollar, at around HK$7.8 to US$1, through a Currency Board system. Statement II is correct: the Financial Secretary determines the objective and the structure of the monetary system. Statement III is correct: the Monetary Authority, the HKMA's Chief Executive, is responsible for achieving it, including the strategy, instruments and operational means. Statement IV is wrong: Hong Kong has no inflation target; interest rates adjust to keep the exchange rate stable. Source: HKMA, Key Functions: Money (hkma.gov.hk) (as at October 2026).
Assuming the HKMA works like an inflation-targeting central bank. Its single objective is exchange rate stability, set by the Financial Secretary.
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