THE shift to a real interest rate regime in Hong Kong moved a little closer yesterday, with the United States Federal Reserve living up to expectations and taking the bold step of a 50 basis point increase in both its key rates. But before the property developers start panicking and wondering what it will be like to do business in a place where the cost of money is actually positive, they can be reassured that Alan Greenspan, chairman of the Fed, does not call his boys in again until July 5. The next move belongs to the Hong Kong Association of Banks, and they will be doing no-one any favours when they meet on Friday if they decide that they can act the immovable object to the irresistible force. Once more, they must come to terms with the fact that the Fed is, in this situation, our central bank, too. We have the peg; we have to live with its implications, and those are that interest rates in Hong Kong have got to go up. It is a heaven-sent opportunity to wage war on inflation. If not war - for real interest rates will still lag behind the current 8.5 per cent rate of inflation - then something more than the light skirmishing we have seen so far, with dismal results. If we really wanted to get serious about inflation, then perhaps a little nudge from the Government might make banks leapfrog the Americans and put the local rate up by 0.75 of a percentage point to 7.5 per cent. This would be brave but very unpopular with the big developers, most of whom are financially cushioned enough to stand it, and the ordinary mortgage payers - many of whom are not. Raising the costs of doing business might not seem such a good idea right now. They are already too high, but the impact of higher interest rates would be minimal for most traders, manufacturers and service companies compared to the beneficial long-term effects of slowing the across-the-board increases in prices in the territory. We certainly do not seem to have to worry that the US dollar, buoyed by higher interest rates, will be dragging the Hong Kong dollar up to dangerous levels against the rest of the world's currencies. There was little sign yesterday that the pressure on the greenback was coming off. Despite the Bundesbank jacking up its repo rate by 12 basis points to 5.23 per cent, the US dollar was still having to struggle to hold its own against the deutschemark and the yen. It seems that concern about inflation, and the willingness to fight it - which has been the bane of the bond markets this year - have not gone away, despite the downward trend in prices which was still in evidence with April's consumer price index increase of just 2.4 per cent. Of course, if US domestic demand continues to career along at approaching four per cent, instead of a more sustainable two per cent, then this solid record cannot continue, particularly if import prices continue to suffer from the still vulnerable dollar. That braking effect may already have begun, with the latest round of prime rate increases. From yesterday, these are back up to 7.25 per cent, the highest for more than two years, and this is going to have an impact on the marginal spending power of Mr and Ms John Doe, particularly if they share a mortgage. Between now and July 5, the swing of the pendulum should become more pronounced, giving Mr Greenspan the opportunity to engage in a little more fine-tuning if necessary. For Hong Kongthe problems are not getting any easier; wrestling the economy to the ground without serious damage is likely to become more difficult the longer it is allowed to stomp around as it is at the moment. While the immediate problem for Hong Kong is local inflation and falling competitiveness, there is a real danger ahead that the China syndrome will lose its magic for the territory, at least in the short term. So just when the good old US could resume some of its old importance for Hong Kong's economy by making up for the slowdown on the mainland, the Fed's turning of the screw could be forcing consumers to keep a more careful watch on their spending. It is at this point that the territory might find it useful to de-couple from US interest rates in a controlled adjustment which would take the pressure off local businesses and consumers. That luxury will have to wait until sometime after July 1997. Meanwhile, it is Mr Greenspan who will be setting the interest rate agenda for Hong Kong.