Macao raises base rate to 1.25%

MACAO - China's Macao Special Administrative Region Monetary Authority (AMCM) on Thursday raised the base rate charged through its overnight discount window from 1.0 percent to 1.25 percent.

The move followed the US Federal Reserve's decision to raise the target range for the federal funds rate by 25 basis points to 0.75-1.0 percent on Wednesday.

The pataca is linked to the Hong Kong dollar. Hong Kong Monetary Authority on Thursday morning has adjusted upwardly interest rates by 25 basis points. The movements of policy rates in Hong Kong and Macao should be basically consistent in order to maintain the effective operation of the linked exchange rate system, AMCM said in press release.

According to AMCM, Macao's interest rates on the retail level, including loan and deposit rates, would be influenced by future developments in the money market.

The AMCM told local banks to assess and manage the potential risks associated with interest rate adjustments.

Macao Special Administrative Region government also reminds those who consider using new mortgages for property purchase or investment to act within their means.

The AMCM said it will monitor the development of the global financial market, especially the impacts of rising interest rates on local asset prices and the financial system of Macao, and maintain close communication with the banking industry to safeguard Macao's financial stability.