Financial Secretary John Tsang has urged Hong Kong people to unite amid the global financial storm.

In response to several central banks' unprecedented co-ordinated move to cut rates to lift their economies out of the financial turmoil, Mr Tsang today said the move will increase liquidity in the markets.

Noting the move has shown the international world will work together to tackle the problem, he called on Hong Kong people to come together to face the challenge.

Secretary for Financial Services & the Treasury Prof KC Chan said the interest rate cut is necessary because the market is expecting a slowdown in economy.

"An interest rate cut is something the market believes is consistent with the economic outlook. Put another way, if the interest rate is not cut, then the market will wonder what is going on. So I think this is a necessary thing. It is part of the game in order to restore market confidence."

Base rate falls to 2%

Meanwhile, the Monetary Authority today announced the base rate has been adjusted downward to 2% with immediate effect, according to the new pre-set formula and the US Federal Reserve's decision to reduce the US federal funds target rate by 50 basis points.

The authority's chief executive Joseph Yam hoped the adjustment will have a positive impact on retail loan interest rates in the long-run, facilitating loan activities in various trades.