The Federal Reserve announced on Dec. 18 that it had lowered the target range for the federal funds rate by 25 basis points to between 4.25% and 4.50%. The Hong Kong Monetary Authority announced today (Dec. 19) that the base rate is set at 4.75% according to a preset formula, effective immediately.
In response to the 25 basis point reduction in the target range for the federal funds rate, the current lower limit of the federal funds rate, plus 50 basis points, is 4.75%. Meanwhile, the five-day moving average of the overnight and one-month Hong Kong Interbank Offered Rate (HIBOR) is 4.20%. Therefore, based on the preset formula, the base rate is 4.75%.
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