Buildings are seen from Victoria Peak in Hong Kong, Aug 28, 2019. (PAUL YEUNG / BLOOMBERG)

The Hong Kong Monetary Authority cut its benchmark interest rate in line with the US Federal Reserve.

The HKMA on Wednesday lowered its base rate to 1.50 percent from 2.00 percent in step with the Fed’s move according to a “pre-set formula”.

The HKMA lowered its base rate to 1.50 percent from 2.00 percent in step with the Fed’s move according to a “pre-set formula”

The move is an automatic response to Fed Chairman Jerome Powell’s emergency 50 basis point reduction to counter the economic effects of the spreading coronavirus epidemic.

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As the Hong Kong dollar is pegged to the greenback, the city essentially imports US monetary policy. Local banks aren’t obliged to follow with lower borrowing costs, though the city’s battered economy after months of protests and now the virus outbreak is in need of support

Hong Kong’s government unveiled a giveaway-packed budget in February, as well as a projected record deficit for 2020, as officials attempt to prevent the first back-to-back annual recessions on record. Months of unrest pushed Hong Kong last year into a slump that the shutdowns associated with the coronavirus epidemic are now worsening.

READ MORE: Hong Kong cuts base rate after Fed as city faces recession