INTEREST rates could rise slightly again this year but this would not cause much harm to the economic recovery, the head of the Hong Kong Monetary Authority said yesterday. Authority Chief Executive Joseph Yam Chi-kwong said the SAR would have to follow the trend of interest rate adjustments in the United States because of the dollar peg. But he said he did not expect sharp rises. 'I would say there could be very minor adjustments,' he said. On Friday, in a move expected by many bankers, leading banks raised their prime rates by a quarter of a percentage point to 8.5 per cent. The move followed a decision by the Hong Kong Association of Banks to increase savings-deposit interest rates by the same amount to 3.75 per cent. On Tuesday, US banks raised prime rates by a quarter of a percentage point to 8.25 per cent after the Federal Reserve increased the federal funds rate and the discount rate by the same amount. Mr Yam said the minor rise in interest rates would not have a serious impact on the property market, saying mortgage rates had dropped over the past year. He also said economic data indicated the economy had begun to bounce back after a sharp recession. 'I believe the worst is over, and the local economy should be bottoming out,' Mr Yam said in a Commercial Radio interview. On Friday, the Government announced that gross domestic product grew 0.5 per cent in the second quarter of the year, compared with the same period a year ago, representing a distinct rebound from negative figures of the past 12 months. Mr Yam admitted the pace of recovery had been slower than in other Asian countries, but it had been steady. Economist Leung Siu-kei said he expected a steady growth if consumer confidence could be boosted. He estimated gross domestic product could rise by two to four per cent in the second half of the year. Director of the University of Science and Technology's centre for economic development, Dr Francis Lui Ting-ming, expected four and seven per cent growth respectively in the third and fourth quarters of the year.