HKMA raises base rate by 25 basis pts to 1.75% following Fed hike

This was the third increase this year.

The Hong Kong Monetary Authority (HKMA) raised the base rate by 25 basis points to a rate of 1.75% on December 4, according to a press release.

The increase, which was the third this year, follows the 25-basis point upward shift in the target range for the US federal funds rate on December 13 as the Hong Kong dollar is pegged to the US dollar in a linked exchange rate system.

The Base Rate is the interest rate forming the foundation upon which the Discount Rates for repurchase transactions through the Discount Window are computed, according to the HKMA.

It is currently set at either 50 basis points above the lower end of the prevailing target range for the US 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 the higher.