A view of Hong Kong. Photo: VCG

"It is important to maintain economic and financial stability during this difficult period, especially as the external environment is also changing rapidly, and guarding against sudden reversals in capital flows or market sentiment is also a must-do," Financial Secretary of the Hong Kong Special Administration Region (HKSAR), Paul Chan Mo-po, said on Sunday.

He noted that Hong Kong's financial and monetary stability risks are manageable facing the US interest rate hike cycle.

In the past two years, every step on the fight against the epidemic has not been easy. The fifth wave of the virus has plunged the whole society into a bitter battle, according to an article Chan posted on the official website of the Financial Secretary of the HKSAR on Sunday.

In these difficult times, maintaining economic and financial stability is also extremely important, especially as the external environment is changing rapidly.

In particular, US inflation has continued to pick up sharply from 1.4 percent early last year to 7.5 percent in January, the highest in four decades, beating market expectations. It also explains why the Federal Reserve will tighten its monetary policy quicker than it did in the past. That prospect sent global stock markets spinning last week. 

"As a small and open economy, Hong Kong needs to be more vigilant against these potential risks. We have been keeping a close eye on the peripheral environment. Our assessment is that the risks to Hong Kong's financial and monetary stability from this cycle of interest rate rises in the US are manageable, and that the buffers and anti-seismic measures we have put in place over the years remain effective," said Chan.

In the face of the rapid spread of the coronavirus in communities, a number of epidemic prevention links have faced serious bottlenecks. The care, support and assistance from the central government has greatly improved the conditions in all areas, helped the HKSAR to quickly respond to and resolve current difficulties, and swiftly brought the epidemic under control. This is the key to stabilizing the hearts and minds of the people and the foothold to support the economy, according to Chan.

"In order to protect the safety and health of our citizens, we must make every effort to fight the epidemic in accordance with the goal and strategy of 'dynamic zero,'" said Chan.

The upward trend in interest rates and epidemic outbreaks in recent months may affect the cash flow of some citizens and small and medium-sized enterprises. 

"We and the Hong Kong Monetary Authority have been paying close attention to this aspect and have encouraged banks to give assistance. We hope to provide as much support as possible to enterprises during hard times and work together to overcome difficulties and make efforts for a quick economic restart after the epidemic," Chan remarked.