A FURTHER rise in the United States Federal Reserve fund rate finally triggered a corresponding move in Hong Kong's deposit and lending rates, ending speculation on when and how far Hong Kong should move. A trend of interest rates picking up in the US has emerged in the past few days following another 25 basis points increase in the Fed rate two days ago, up from 3.25 per cent to 3.5 per cent. That move convinced the Hong Kong Association of Banks (HKAB) and the Hong Kong Monetary Authority (HKMA) that yesterday was the time to move. They decided to raise the savings rate from Monday. ''The US interest rate is unlikely to come down. At most, interest rates will stay stable for quite a long time, with the possibility of further increases,'' said HKMA chief executive Joseph Yam. The fund rate first moved up 25 basis points from three per cent to 3.25 per cent on February 4 but the HKAB decided against following immediately. ''We adopted a wait-and-see approach after the Fed's first move in February. Now, with the increase of another quarter of a percentage point, there is a clear sign that a trend is developing,'' said HKAB chairman Paul Selway-Swift. Apart from the definite message from the US, what prompted yesterday's decision was the reaction of the inter-bank market. Since the Fed's February move, the Hong Kong inter-bank market interest rates have all risen by 50 to 75 basis points, particularly long-term money rates. ''The inter-bank market has reflected totally the increase in the US Fed fund rate. With the gap between the inter-bank rate and the savings rate widening, banks have room to push up the savings rate,'' said Mr Yam. Those with longer maturities rose much more sharply than short-term money, and that was shown by a higher interest rate increase for time deposits than savings deposits. The HKAB decided to lift time deposits by three quarter of a percentage point, while the savings rate only goes up half a percentage point. Concern over the impact of a rate increase on the stability of the exchange rate was another factor pulling the association back last month. ''The Hong Kong dollar remains strong in anticipation of an increase in interest rate by the HKAB,'' he said, adding the market has moved ahead of the HKAB's decision and already discounted a rate increase. ''If the HKAB decided to increase interest rates in February, that might have affected the exchange rate. But experience shows us that, after a while, the market has discounted that factor.'' Mr Yam said he expecting no significant swings in the exchange rate. Meanwhile, the bid and offer rate of the Liquidity Adjustment Facility (LAF) - the overnight lending window for banks - remains at the same level, two per cent on bid and four per cent on offer. Explaining the Hongkong Bank's decision, Mr Selway-Swift said the bank had three options - to do nothing, a half percentage point increase, or to move somewhere between. ''Given the high inflation and active mortgage market, it is better to do something. But increasing the rate by half a percentage point will put additional strain on those who are struggling to meet their mortgage payments,'' he said.