The Hong Kong Monetary Authority announced on the 17th that according to the preset formula, the basic interest rate has been raised to 4.25%, effective immediately.
The Hong Kong Monetary Authority stated that the setting of the base rate is based on two data points, namely the lower limit of the current target range for the US federal funds rate plus 50 basis points, or the average of the 5-day moving average of overnight and one month Hong Kong interbank offered rates, whichever is higher.
The Hong Kong Monetary Authority stated that on the 16th local time, the United States raised the target range for the federal funds rate by 25 basis points. The current lower limit of the target range for the US federal funds rate plus 50 basis points is 4.25%, while the average of the 5-day moving average of overnight and one month Hong Kong interbank offered rates is 2.50%. Therefore, according to the preset formula, the base rate is set at 4.25%.
The Chief Executive of the Hong Kong Monetary Authority, Yu Weiwen, stated that the currency and financial markets in Hong Kong are operating in an orderly manner. The interest rate spread between Hong Kong and the United States has further widened, and carry trades may gradually weaken the Hong Kong dollar. There are many variables in the direction of Hong Kong's interest rates and interbank lending, especially influenced by factors such as the Hong Kong US interest rate spread, the supply and demand of Hong Kong dollar funds, capital market activities, and other seasonal factors. As for the deposit and loan interest rates, banks generally consider factors such as the supply and demand of funds in the interbank market, interest rates and current levels of relevant interest rates, and their own capital cost structure to assess whether adjustments are needed and the extent of adjustment.