In this Oct 24, 2008 photo, a pedestrian walks past the building housing Hong Kong Monetary Authority's office in Hong Kong. (PHOTO / AFP)
HONG KONG – The Hong Kong Monetary Authority (HKMA) on Thursday raised its base rate charged through the overnight discount window by 25 basis points to 5.25 percent, 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 special administrative region's currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar.
The base rate is the interest rate forming the foundation upon which the discount rates for repurchase transactions through the discount window are computed.
"The base rate 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,” the HKMA said in a statement issued Thursday morning.
The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point, but indicated it was on the verge of pausing further increases in borrowing costs after the recent collapse of two US banks.
The Federal Open Market Committee policy statement also said the US banking system is "sound and resilient".
With Reuters inputs