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2018-03-22 HKT 12:02
HSBC and Bank of China said on Thursday they were keeping their savings and lending rates unchanged, despite the latest US central bank interest-rate hike.
Local banks haven't reacted to rate increases in the US since the Federal Reserve started raising borrowing costs from late 2016.
Earlier, the head of the Hong Kong Monetary Authority Norman Chan said the authority is ready to step in to defend the US dollar peg, after the HKMA raised its base rate by 25 basis points to 2 percent, matching the overnight increase by the Federal Reserve.
The Hong Kong dollar earlier sank to its weakest level in more than three decades, near the lower limit of its trading band, and Chan said a move to defend the peg would force banks to raise their lending rates.
Chan said as soon as the Hong Kong dollar hits the limit, the HKMA will step in and buy local currency, selling US dollars. "If that happens the monetary base of Hong Kong will shrink and that will pave normalisation of Hong Kong dollar interest rates," he said.
Chan said excess liquidity has kept the inter bank interest rate unusually low in recent years.
"The Hong Kong market has been experiencing a huge amount of liquidity. "The monetary base of Hong Kong has risen to over HK$1.6 trillion, as a result of which the inter bank interest rate has remained low for a long time. This is, I would describe as unusual...abnormal", he said.
Last updated: 2018-03-22 HKT 18:31