HONG KONG (Reuters) -The Hong Kong Monetary Authority (HKMA) on Thursday raised its base rate charged through the overnight discount window by 25 basis points to 0.75%, matching the size of a rate hike announced by the U.S. Federal Reserve hours earlier.
Hong Kong’s monetary policy moves lock-step with the U.S. central bank as the city’s currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar.
However, most of the major banks in the city, including HSBC and Standard Chartered, leave their best lending rates unchanged.
“As regards banks’ interest rates, it will be the commercial decision of banks having regard to their own funding cost structures,” HKMA chief executive Eddie Yue said in a statement ahead of the banks’ decision.
The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point and projected its policy rate would hit a range between 1.75% and 2% by year’s end, taking an aggressive stance against inflation.
“The U.S.’s entry to the rate hike cycle is within market expectation,” Yue said. “Our financial systems and money markets have continued to operate in an orderly and smooth manner.”
HKMA will closely monitor markets with a view to maintaining stability in Hong Kong’s financial and monetary systems, Yue added, noting that global markets have been volatile, and Hong Kong would not be immune.
(Reporting by Donny Kwok and Alun John; Editing by Shri Navaratnam, Simon Cameron-Moore and Barbara Lewis)
