THE surprise move by the US Federal Reserve to increase short-term rates by 25 basis points drew mixed response from Hong Kong property agents, stock brokers and economists. US banks responded by raising prime rates a half a percentage point to 6.75 per cent in a move to protect profit margins after the third Fed increase this year. It was the second increase in the prime rate this year and the highest prime in more than two years. While Hong Kong property agents said the US rate rise could speed up the consolidation and correction of the overheated property sector, the potential effect on stocks and bonds was regarded as relatively mild. K B Wong, associate partner of Knight Frank Kan and Baillieu, said the US move would fuel expectations of a rate rise in the territory, which would cast a shadow on all investment markets. He said: ''The US move to increase interest rates has come faster than expected. It will have a psychological effect on the local property market although the real impact will be limited. ''It gives a further excuse for home-seekers to wait and see because of the uncertainties.'' He said there could possibly be a downward adjustment of five to 10 per cent in residential prices in the coming months, and activity would be thin. Stephen Chan, managing director of Midland Surveyors, said speculators would be hardest hit by a further rise in rates, some possibly being forced to dump their holdings of residential units. Fears of rate rises were having a psychological effect on prospective buyers, he said. Nevertheless, the fundamentals of the property market remained intact despite those concerns, he said. ''Any fall in prices will be temporary and the market's long-term prospect is still positive,'' he said. Bruce Walker, director of Vigers Hong Kong, said the US increase was in line with the Fed's policy of adjusting rates upwards in a gradual manner. In these circumstance, the uptrend would have a gradual and accumulated affect on the Hong Kong property market, he said. Stock brokers were generally nonplussed by the Fed move. Most said the increase was inevitable and had already been factored into the market. While the timing caught most off guard, the rate increase came as no surprise. Reaction centred on how it would affect property stocks, which are most vulnerable due to the government's drive to reduce property prices. Barclays de Zoete Wedd assistant director Nial Gooding said it would have taken a miracle to get the market up this week, and the rate increase would not have too much effect. ''There may be some blokes in Outer Mongolia who don't know that rates are increasing, but everyone else does,'' he said. Mr Gooding said there might be some pro-active investors who would use the opportunity to buy on the news. Yesterday afternoon's rally showed there was support coming through, he said. ''From a technical view, we are oversold at the moment,'' he said. The bond market, which had reacted strongly to the last increase, seemed to have discounted it this time, with the yield on three-year Hong Kong dollar bond up 20 to 30 basis points. This compares with the 60 to 70 basis-point rise last time. The inter-bank overnight rate hovered around 3.75 per cent yesterday morning, the same as the US Fed fund rate, implying the increase was digested. Joseph Yam, chief executive of the Hong Kong Monetary Authority, said more time was needed to observe the market's reaction. Whether there were sufficient conditions for a rise in savings rates hinged on how the market absorbed the news, he said. But there was no need to adjust the bid or offer rate of the liquidity adjustment facility, the equivalent of the US discount window, because 3.75 per cent was still within its bounds, he said. Economists in the US said while interest rates would slow American economic growth in the second half of this year and in 1995, the increases so far have not been large enough to threaten a recession. Analysts believed the economy would turn in respectable growth rates this year even though the Fed was tightening credit because of a stronger than expected start in 1994. Some analysts said they believed the Fed could move soon to boost rates again, but some suggested that could be the last increase for a while, on the grounds that the economy would be showing signs of slowing down. The government highlighted one area of weakness yesterday when it reported that the US trade deficit surged 46.1 per cent to US$9.71 billion in February, reflecting that merchandise imports shot up to their second highest level on record, while US exports declined slightly. Analysts said the trade deficit was likely to continue holding back overall growth this year as US exporters continued to have difficulty selling in sluggish overseas markets. While the trade deficit is expected to detract from strength, many other economic sectors have been strong, especially business investment spending and consumer sales. One of the reasons the Fed has been tightening credit conditions has been to slow down these areas and thereby keep the economy from overheating. The danger, however, is that the central bank will overdo the tightening and slow growth so severely that the chances of a recession will increase. Analysts, for the most part, said they believed the chance of a downturn in the next two years from the tightening was slight although they said growth would be reduced.