The short-term Hong Kong interbank offered rate (Hibor) continued to edge higher yesterday as market traders waited for the outcome of the latest Federal Open Market Committee meeting in the United States early today. On the final trading day of the first half, the benchmark one-month Hibor rose to 3.39 per cent, a near 30-basis-point increase from a week ago. Overnight rates hit 4 per cent at one stage yesterday. ICBC (Asia) executive director and deputy general manager Stanley Wong Yuen-fai said the increase reflected an equalising of the prime lending rate-Hibor spread, which had traditionally been around three percentage points. Hong Kong lenders are likely to raise prime rates by a further 25 basis points next week in response to the expected US rate rise today. It will bring most of their prime rates to 6.25 per cent, creating a prime-Hibor spread of 2.85 per cent. 'After a long period of an unusually narrow interest margin, the Hong Kong interest-rate structure is now entering a period of normalisation,' Mr Wong said. The one-month Hibor last rose to below 3.4 per cent in late May, when retail investors rushed to banks and brokers to borrow funds for the large share offerings by mainland companies last month. This time, Mr Wong attributed the steep Hibor rise to the customary discreet approach by traders before a long weekend. Most analysts predicted the upward interest-rate cycle in the US to peak at the end of the third quarter, with Hong Kong interest rates following a similar pattern. The two rates began moving in different directions in the third quarter of 2003 as hot money flowed into Hong Kong in anticipation of a yuan revaluation. The situation has been in reverse since early this year.