THE uncertainties surrounding Hong Kong in the first half of the year, such as interest rate increases, the spiralling property market and the overheated Chinese economy, will dissipate in the second half, driving the territory to another year of steady growth, a bank report says. The latest issue of Economic Analysis, published by the Bank of East Asia, states that both consumer and investor confidence were affected by uncertainties in the six months. ''As the dust begins to settle in the second half, economic conditions will recover as the year comes to a close,'' the report says. Anxiety over the negative impact of higher interest rates has subsided; the United States Federal Reserve's move to edge up fund rates in February has reversed the era of ''low interest-rate policy''. It forecasts difficulty for Hong Kong in restoring a positive real interest rate environment as the US will not drastically raise interest rates to stall economic growth. The Hong Hong Government's measures to rein in the runaway property market will soften prices a bit before they pick up again. However, the spiral effect of property prices on rental payments and a higher-than-expected increase in the cost of transportation will accelerate domestic inflationary pressure. ''Inflation will remain at 8.5 per cent this year, even though it showed signs of improvement in the first four months when compared with last year,'' the report says.