HKMA Hikes Rate After US Fed Move

The Hong Kong Monetary Authority (HKMA) raised the base rate to 3.5%, effective immediately. This follows a further tightening by the U.S. central bank to counter soaring inflation, according to a Sept. 22 press release.

The base rate is the interest rate which forms the foundation on which discount rates - for repurchase transactions through the discount window - are computed. The base rate is currently set at 50 basis points above the lower end of the target range for the U.S. federal funds rate or the average of the five-day moving averages of the overnight and one-month Hong Kong Interbank Offered Rates (HIBORs), whichever is higher, according to the HKMA.

The U.S. Federal Reserve raised its rate by 75 basis points on Sept. 21 in a bid to control high consumer prices. Like many other central banks, the HKMA is influenced by the Fed as the Hong Kong dollar is pegged to the U.S. currency.