HONG KONG, March 16 (Xinhua) -- The Hong Kong Monetary Authority (HKMA) on Monday lowered the Base Rate to 0.86 percent, following an interest rate cut of the United States.
The U.S. Federal Reserve has decided to adjust downward the target range for the U.S. federal funds rate by 100 basis points to 0 to 0.25 percent, marking the second rate cut over the past two weeks in response to the economic impact of the spreading coronavirus.
Consequently, the HKMA adjusted the Base Rate to 0.86 percent, the average of the five-day moving averages of the overnight and one-month Hong Kong Interbank Offered Rates (HIBORs) according to the pre-set formula, with immediate effect.
Chief Executive of the HKMA Eddie Yue said the HKMA will work with other financial regulators to closely monitor the market situation amid global volatility and will also ensure the stability of the Hong Kong dollar in accordance with the Linked Exchange Rate System.
Hong Kong's markets still perform normally and the banking sector has abundant capital and liquidity, Yue said.
The Base Rate is the interest rate forming the foundation upon which the Discount Rates for repurchase transactions through the Discount Window are computed.
It is currently set at either 50 basis points above the lower end of the prevailing target range for the U.S. federal funds rate or the average of the five-day moving averages of the overnight and one-month HIBORs, whichever is the higher.
