Adjustment of the Base Rate

The Hong Kong Monetary Authority (HKMA) announced today (Wednesday) the adjustment downwards of the Base Rate to 0.5% with immediate effect according to the new formula announced on 8 October 2008 and following the decision of the US Federal Reserve on 16 December (US time). Since the US federal funds target rate is reduced to the range of 0% to 0.25% and federal funds are effectively trading at 0%, the Base Rate is set at 50 basis points above the lower boundary of the target range at 0.5%.

The Base Rate is the interest rate forming the foundation upon which the Discount Rates for repurchase-agreement transactions through the Discount Window are computed. According to the new formula announced on 8 October 2008, the Base Rate is set at 50 basis points above the prevailing US federal funds target rate.

For further enquiries, please contact:
Thomas Chan, Communications Chief, at 2878 1480 or
Peggy Lo, Manager (Communications), at 2878 1687

Hong Kong Monetary Authority
17 December 2008