Most Hong Kong banks will not follow a decision earlier this week by the United States Federal Reserve to raise short-term interest rates by 25 basis points. The city's five biggest banks - HSBC, Bank of China, Hang Seng Bank, Bank of East Asia and Standard Chartered Bank - yesterday announced separately that they would hold their prime lending and savings rates unchanged. Several mid-tier lenders, including Wing Lung Bank, DBS Bank and Liu Chong Hing Bank, will do the same. A spokeswoman for International Bank of Asia said the bank had not reached a decision and refused to comment on the likelihood of a rate rise. She said an announcement would be made next week. The management of Wing Hang Bank, known for its aggressive interest-rate policy, could not be reached for comment yesterday. The decisions by the leading banks came as no surprise as several bankers, including Hong Kong Association of Banks chairman Peter Wong Tung-shun, have hinted in recent months that they would not fall in step with any interest-rate movements in the US. Mr Wong, who is also Standard Chartered's director, reiterated this yesterday. 'When [the Fed] lowered the rate last time, we didn't follow them,' he said. 'So far, the US rate increase has had no effect on Hong Kong's aggregate balance, so there is no need for us to raise rates at this point.' He described Wednesday's increase as the beginning of a cycle that could see the Fed raise its key rate to 1.75 per cent or 2 per cent in the next 18 months. Other bankers and analysts said local interest rates could not ignore the US action. After the latest adjustment to the Fed's funds rate, interest rates on three-month US dollar deposits have increased to 1.6 per cent, compared with a three-month rate on Hong Kong dollar deposits of just 0.498 per cent. To prevent an exodus of Hong Kong dollars into higher-yielding deposits, local rates would have to rise, the bankers and analysts said.