Hong Kong's Main Task Is `Fighting Inflation,' Tsang Says -

Hong Kong’s economy may expand as much as 5 percent this year and “fighting inflation” is the government’s major task, Financial Secretary John Tsang said in his budget speech today.

Gross domestic product rose 6.2 percent in the fourth quarter from a year earlier, Tsang told lawmakers. That was more than the 5.5 percent median estimate of 13 economists surveyed by Bloomberg News.

The government, robbed of an independent interest-rate policy because of a currency pegged to the U.S. dollar, plans to sell up to HK$10 billion of inflation-linked bonds to help residents cope with rising costs, starting in six months, according to Tsang. He also pledged to boost land supply to head off the risk of a property bubble.

“Inflation is rearing its head and rising price pressures will test the government’s fine-tuning skills in the coming year,” Donna Kwok, a Hong Kong-based economist at HSBC Holdings Plc, said before the announcement.

Consumer prices jumped the most in 29 months in January, a report yesterday showed.