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Hong Kong’s banks raise prime rates after city’s funding cost soars to 16-year high as US Fed leaves the door open for more inflation-busting moves

  • The public should take be cautious of the high interest rate environment and that it may prevail for some time, acting HKMA CEO Arthur Yuen warns
  • HSBC and BOCHK were the first banks to increase their prime rates following the move by the city’s monetary authority

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People crossing the road in Hong Kong’s Central district on 11 April 2023. Photo: Jelly Tse

Hong Kong’s commercial banks raised their prime rates for the second time this year, after the local monetary authority hiked the city’s base rate by a quarter point in lockstep with the US Federal Reserve.

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Bank of China (Hong Kong), HSBC and Hang Seng Bank will raise the lending rate for their best customers by 12.5 basis points to 5.875 per cent from as early as Friday (today), paying 0.875 per cent per annum for saving deposits.

Standard Chartered Bank and Bank of East Asia will raise their prime rates by the same margin to 6.125 per cent, starting Monday , according to separate statements by the banks. They will also pay 0.875 per cent for the most basic savings accounts.

“Having considered the macroeconomic environment, [interest rate] trends as well as the impact on our economy, we believe the adjustments announced today are appropriate,” HSBC’s Hong Kong CEO Luanne Lim said. “We will continue to monitor the external environment and be prepared to adjust our rates when needed.”

HKMA’s acting CEO Arthur Yuen warned the public o Thursday to be aware of uncertainties due to rising interest rates. Photo: Enoch Yiu
HKMA’s acting CEO Arthur Yuen warned the public o Thursday to be aware of uncertainties due to rising interest rates. Photo: Enoch Yiu
Hours earlier, the de facto central bank raised the city’s base rate for the 11th time in 17 months in lockstep with the Federal Reserve, as the US central bank resumed its fight against inflation after a breather six weeks ago.
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