The Hong Kong Monetary Authority has lowered the base interest rate by 25 basis points to 4%.

On December 11th, the Hong Kong Monetary Authority announced that the base rate would be set at 4.00% based on a predetermined formula, with immediate effect. This decision was made in response to the Federal Reserve lowering its target range for the federal funds rate by 25 basis points on December 10th (U.S. time). The current lower end of the target range for the U.S. federal funds rate plus 50 basis points is 4.00%, and the 5-day moving average of the overnight and 1-month Hong Kong Interbank Offered Rate (HIBOR) is 2.39%. Therefore, the base rate was set at 4.00% according to the predetermined formula. The base rate is used as the base rate for calculating the discount rate applicable to repurchase transactions conducted through the discount window. Currently, the base rate is set at either the lower end of the target range for the U.S. federal funds rate plus 50 basis points or the 5-day moving average of the overnight and 1-month HIBOR, whichever is higher.