Bank of East Asia

Bank of East Asia chairman says rate cut likely

PUBLISHED : Friday, 12 November, 2004, 12:00am
UPDATED : Friday, 12 November, 2004, 12:00am

Updated at 12.04pm:
Bank of East Asia (BEA) chairman David Li Kwok-po said on Friday morning the bank might follow other leading banks in cutting interest rates.

The comment came a day after HSBC, Hang Seng Bank, Standard Chartered and DBS Bank announced reductions to their deposit rates from 0.125 per cent to 0.01 per cent per annum - with effect from Friday. The prime lending rate would also be cut from 5.125 per cent to 5 per cent per annum.

The BEA had said on Thursday it would leave its rates unchanged. But on Friday, Mr Li said the bank was now reconsidering whether they should lower rates.

'I think it's very likely that we will follow the market trend,' he said.

'Although yesterday we didn't want to lower the rates, but when we saw HSBC, Hang Seng Bank and Standard Chartered - who at first said it won't change their rates - cut their interest rates, I think we need to see what we should do,' Mr Li explained.

BEA would make an announcement on Friday afternoon, he added.

The response from local banks follows the decision on Wednesday by the US Federal Reserve to raise its key short-term interest rate by 0.25 percentage points to 2.0 per cent - up from 1.75 per cent.

On Thursday, Hong Kong's Monetary Authority raised the base interest rate by a quarter percentage point to 3.5 per cent.

Bank of China Hong Kong said on Thursday it would keep their rates unchanged.