Government monitoring effect of interest rate hike on SMEs

The government is paying close attention to a recent increase in the base interest rate of Macau’s banking system and the possible impact on the city’s economy, according to a statement.

In particular, the government is closely monitoring the possible impact of higher interest rates on local small- and medium-sized enterprises (SMEs), which it says may be affected by a “weakening in the purchasing power of mainland tourists related to changes in the pataca-renminbi exchange rate.”

The Monetary Authority of Macao last week raised the base rate of the discount window by 25 basis points to 2.0 percent, following a decision by the United States Federal Reserve to increase its short-term interest rate. The Macau pataca is indirectly pegged to the U.S. dollar via the Hong Kong dollar.

The Secretary for Economy and Finance, Lionel Leong, said last week that Macau’s economy was fundamentally sound and its prospects had been positively evaluated by a number of international bodies. He stated that members of the public need not worry about Macau’s economic prospects.

As Macau has now entered a cycle of rising interest rates, the government has advised members of the public to bear this development in mind if they wish to buy a property, start a business, or engage in commercial trade, Leong added.