Hong Kong lenders are likely to follow the United States Federal Reserve and raise interest rates again this week but views are mixed on whether they will pass on the full rise of 25 basis points expected from the Fed. Lenders also expected that the divergence in prime lending rates - with some banks quoting a prime rate of 7 per cent and others 7.25 per cent at present - would continue for a while. Last month, the Big Three deposit-takers - HSBC, Bank of China (HK) and Hang Seng Bank - followed the US by raising their prime rates 25 basis points, although most small and medium-sized lenders raised their rate by a half percentage point, introducing the rarely seen two-tiered market. 'Banks are still under pressure to raise prime rates further to improve their interest spread,' said Sunny Cheung Yiu-tong, the director and head of consumer banking at DBS Bank (HK). However, whether smaller banks do so may depend on the response of the Big Three. 'If banks with lower prime rates raised their rates by more than 0.25 percentage point, others might follow,' he said. Mr Cheung expected small and medium-sized banks would not lift their rates higher than the Big Three if the latter increases were in line with US fed funds rate rises. Competitive forces meant that the gap between rates could not be allowed to widen further, he said. Stanley Wong Yuen-fei, a director and deputy general manager at ICBC (Asia), believed Hong Kong lenders would increase prime and saving rates by 25 basis points and match the likely next rise in the US. Mr Wong also expected the Big Three deposit-takers would not increase prime rates by more than 25 basis points as they had access to cheaper saving deposits to fund their loans, and less reliance on more costly interbank funding. 'If they raise the prime rate higher, they also have to pay more to their depositors,' Mr Wong said. Brian Cheung Nam-chong, a manager at Liu Chong Hing Bank, said: 'Banks with lower prime rates may raise their rates by more than 0.25 percentage point to bring them into line with their peers.' Meanwhile, Mr Wong expected the US interest rate-rise cycle would extend into the first quarter of next year and he forecast increases of 0.75 per cent (including tomorrow's expected rise) to come, bringing Hong Kong prime rates to between 7.75 and 8 per cent.