The Hong Kong Monetary Authority on Thursday raised its base rate charged through the overnight discount window by 75 basis points to 3.5%, hours after the US Federal Reserve delivered a rate hike of the same margin.
Hong Kong’s monetary policy moves in lock-step with the US as the city’s currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar.
The Fed delivered its third straight rate increase of 75 basis points on Wednesday and signalled borrowing costs would keep rising.
Hong Kong’s monetary and financial markets have been operating normally and smoothly, with no signs of massive capital outflow, said Eddie Yue, chief executive of the HKMA.
After the US Federal Reserve announced another 75-bp rate hike, Hong Kong’s local banks are highly likely to lift the deposit and lending interest rates, including the prime rates, as the U.S. is anticipating to continue to raise the interest rates for the rest of this year, he said.