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Hong Kong's Base Rate is set at 4.25 per cent

The Hong Kong Monetary Authority set the Discount Window Base Rate at 4.25 per cent after the 25-basis-point US move. The Standard says the step tracks US policy to hold the Hong Kong dollar peg and that banks may later adjust prime rates.

Economics & Markets··Morning
Dusk over Victoria Harbour, Hong Kong skyline and the regional bauhinia flag on a promenade pole.

A formula, not a fresh discretionary vote

The Hong Kong Monetary Authority said on 17 September that the Base Rate had been set at 4.25 per cent with immediate effect according to a pre-set formula. The rate is the higher of 50 basis points above the lower end of the prevailing US federal funds target range and the average of the five-day moving averages of overnight and one-month HIBORs. After the 25-basis-point upward adjustment in the US target range on 16 September US time, 50 basis points above the lower end equalled 4.25 per cent, while the HIBOR average was 2.50 per cent, so the Base Rate was set at 4.25 per cent.[1]

Markets watch prime rates next

The Standard reports the Hong Kong Monetary Authority raised the Base Rate 25 basis points to 4.25 per cent on Thursday, tracking the Federal Reserve, and that banks may later adjust prime rates. The finance article says the move matches HKMA practice of tracking US policy to hold the Hong Kong dollar peg. Markets were watching HSBC and Standard Chartered for prime-rate changes, as that benchmark prices many mortgages.[2]

4.25 per cent is the printed Base Rate

The HKMA press page and The Standard both put the new Base Rate at 4.25 per cent after the US 25-basis-point step. The authority supplies the formula and the 2.50 per cent HIBOR average; The Standard supplies the peg-tracking reading and the unanswered prime-rate question at HSBC and Standard Chartered.[1], [2]

References

  1. News sourceHong Kong Monetary AuthorityHong Kong Monetary Authority sets the Base Rate at 4.25 per cent↩1↩2
  2. News sourceThe StandardHKMA raises the Base Rate to 4.25 per cent after the Fed↩1↩2
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