The Hong Kong Monetary Authority (HKMA) on Thursday highlighted considerable uncertainty around the extent and pace of future US interest rate cuts, noting that Hong Kong's prevailing interest rate environment may also evolve due to US monetary policy changes, market sentiment and external financial conditions.

The statement followed a decision by the US Federal Reserve's Federal Open Market Committee to maintain its key federal funds rate target range at 4.25 to 4.5 percent, which was announced after a two-day policy meeting.

The HKMA said Hong Kong's monetary and financial markets continue to function in an orderly manner.

It noted a significant influx of Hong Kong dollar (HKD) funding in May, which eased pressure on the exchange rate.

However, it said that since late June, the weak-side convertibility undertaking (CU), the mechanism designed to keep the HKD within its trading band, had been triggered multiple times, with the most recent occasion occurring during New York trading hours early on Thursday.

"As liquidity became less abundant after the weak-side CU triggering, Hong Kong dollar interbank rates increased moderately from low levels, although they remained at a distance below US dollar interest rates," it said.

"The current Hong Kong dollar-US dollar interest rate differential continues to incentivise carry trades to sell Hong Kong dollars for US dollars, keeping the Hong Kong dollar trading near the 7.85 weak-side CU level."

The HKMA pointed to strong recent equity-related demand as a factor providing some support for the HKD.

Looking ahead, it cautioned that depending on HKD supply and demand dynamics, US monetary policy and rate movements, stock market sentiment and global financial flows, the weak-side CU could be triggered again.

The HKMA reaffirmed its commitment to closely monitoring market developments to maintain monetary and financial stability.

Additionally, the three note-issuing banks in Hong Kong have followed the Fed's lead to keep the Hong Kong dollar prime rate unchanged, with HSBC and Bank of China (Hong Kong) maintaining rates at 5.25 percent, while Standard Chartered Hong Kong kept its rate at 5.5 percent.