The Hong Kong Monetary Authority cut its benchmark interest rate by 25 basis points to two percent on Thursday, in line with the city's currency peg to the dollar following the U.S. Federal Reserve's reduction in borrowing costs.

The rate cut is the third in a row for the city this year.

Eddie Yue, chief executive at the Hong Kong Monetary Authority (HKMA), told reporters that the downward pressure the city faces is "very large."

The Asian financial hub has been hit this year by both the U.S.-China trade war and five months of often violent anti-government protests.

"The U.S. rate cut does reflect the downward pressure on the global economy to which Hong Kong is not immune," said Yue.

Despite the social unrest, Yue said there had been "no obvious outflows" from the Hong Kong banking system, adding that Hong Kong dollar deposits rose 0.6 percent in September.

Read more: Will ongoing violent protests end Hong Kong's peg to the U.S. dollar?

HKMA had earlier this month cut the amount of cash that banks must keep as reserves, releasing an extra 200-300 billion Hong Kong dollars (25.50-38.24 billion U.S. dollars) into the broader economy.

Hong Kong's commercial banks will decide whether to adjust their benchmark lending rates.

Following the announcement, HSBC cuts its Hong Kong prime lending rate for the first time in 11 years. The bank is to cut the rate by 12.5 basis points to five percent taking effect on November 1.

(With input from Reuters)