Macau’s Base Rate of the Discount Window raised to 1.5pct

The Monetary Authority of Macau (AMCM) raised the Base Rate of the Discount Window yesterday by 25 basis points to 1.5 percent.  It has been the fourth time for the AMCM to raise the policy rate since December 2015.    

According to a statement issued yesterday by the AMCM, “as the pataca is linked to the Hong Kong dollar, the movements of policy rates in Hong Kong and Macau should be basically consistent in order to maintain the effective operation of the linked exchange rate system between the two SARs. As a result, the AMCM raised the Base Rate by 25 basis points, following the Hong Kong Monetary Authority [see above].”

Meanwhile, since the Hong Kong dollar is linked to the U.S. dollar under the linked exchange rate system, the rate hike action of Hong Kong was attributed to the decision of the U.S. Federal Reserve raising the Fed funds rate by 25 basis points on 14 June (U.S. time).

The AMCM explained that interest rates of Macau banks on the retail level, including loan and deposit rates, will be based on the fund costs in the money market and their commercial decisions. The local loan and deposit rates will “remain relatively stable at the current stage,” AMCM states. “Nevertheless, if the uptrend of interest rates persists, uplifting loan and deposit interest rates by Macau banks cannot be ruled out in the foreseeable future.”