Hong Kong's central bank raises base rate by 25 bps in lock-step with Fed

[HONG KONG] The Hong Kong Monetary Authority (HKMA) on Thursday raised the base rate charged through its overnight discount window by 25 basis points to 2.75 per cent.

The decision by Hong Kong's de facto central bank came just hours after the US Federal Reserve raised interest rates by a quarter of a percentage point. The Fed said it was keeping the core of its plan to hike borrowing costs intact even as policy makers stated they would likely slow the pace of further rate increases next year.

Hong Kong moves in lock-step with US rates because its currency is pegged to the greenback.

The monetary authority sets its base rate through a formula that is 50 basis points above the prevailing US Fed Funds Target or the average of the five-day moving averages of the overnight and one-month HIBORs.

REUTERS