On Thu, 17 Sep, HKMA announced that the Base Rate was adjusted to 4.25% with immediate effect following a 25-basis point increase in the US federal funds rate target range on 16 September (US time).
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Purpose and Definition of the Base Rate
The Base Rate constitutes the foundational interest rate upon which Discount Rates applicable to repurchase transactions conducted through the Hong Kong Monetary Authority's (the "HKMA") Discount Window are computed. Pursuant to a pre-set formula, the Base Rate is determined at either: (i) 50 basis points above the lower end of the prevailing target range for the US federal funds rate; or (ii) the average of the five-day moving averages of the overnight and one-month Hong Kong Interbank Offered Rates (""HIBORs""); whichever value yields a higher result.
HKMA Announcement on Base Rate Adjustment
On Thu, 17 Sep, The HKMA announced that the Base Rate had been set at 4.25% with immediate effect in accordance with the aforementioned pre-set formula. This determination followed the 25-basis point upward adjustment to the target range for the US federal funds rate on 16 September (US time). Upon such adjustment, 50 basis points above the lower end of the prevailing target range was calculated at 4.25%, whereas the average of the five-day moving averages of the overnight and one-month HIBORs stood at 2.50%. As the formula adopts whichever value is higher between these two calculations, the HKMA accordingly set the Base Rate at 4.25%.
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