The Hong Kong Monetary Authority announced that the Base Rate has been set at 4.00% with immediate effect. The rate is 50 basis points above the lower end of the US federal funds rate or the average of the HIBORs, whichever is higher.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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The Hong Kong Monetary Authority ("HKMA") has announced today (11 December) that the Base Rate has been set at 4.00% with immediate effect, based on a predefined formula.
The Base Rate serves as the foundational interest rate for computing the Discount Rates in repurchase transactions through the Discount Window. It is currently set at 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 higher.
Given the 25-basis point downward adjustment in the target range for the US federal funds rate on 10 December (US time), 50 basis points above the lower end of the prevailing target range for the US federal funds rate equates to 4.00%, while the average of the five-day moving averages of the overnight and one-month HIBORs is 2.39%. Consequently, the Base Rate has been determined to be 4.00% based on the pre-set formula.
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