Base Rate Lowered To 1.5%

The Monetary Authority today lowered the base rate to 1.5%.

The adjustment, made according to a pre-set formula, followed a 50-basis point downward shift in the target range for the US federal funds rate on March 3.

The authority’s Chief Executive Eddie Yue said: “These actions indicate that the US Fed would proactively use its monetary policy to mitigate possible economic risks posed by the coronavirus.

“However, further developments of the coronavirus are still very uncertain and financial markets will continue to see considerable volatility. Investors should manage their risks prudently.”

The base rate is the interest rate forming the foundation upon which discount rates for repurchase transactions through the discount window are computed.

It is currently set at either 50 basis points above the lower end of the prevailing target range for the US federal funds rate or the average of the five-day moving averages of the overnight and one-month Hong Kong Interbank Offered Rates, whichever is higher.