LEAD: H.K. banks keep prime rates unchanged despite Fed cut
HONG KONG, June 26 Kyodo
(EDS: UPDATES WITH BANKS’ DECISIONS, OFFICIAL’S REMARKS)
Major banks in Hong Kong said Thursday they will leave their best lending rates and standard deposit rates unchanged although the U.S. Federal Reserve overnight cut its key interest rate by 0.25 percentage point to 1%, a 45-year low.
HSBC, Standard Chartered Bank, Bank of China (Hong Kong), Hang Seng Bank and Bank of East Asia all said their prime lending rates will remain unchanged at 5.0% and the standard savings rates at 0.01%.
Hong Kong usually mirrors U.S. rate policy because the territory’s currency is pegged to the U.S. dollar.
But the already low interest rates had deterred banks here from fully matching the U.S. Fed’s last cut on Nov. 6, 2002.
Still, the Hong Kong Monetary Authority (HKMA) lowered its base rate by 0.25 percentage point to 2.5% Thursday following the Fed’s latest reduction.
The territory’s de facto central bank announces the base rate each day before Hong Kong’s interbank market opens.
The base rate refers to the interest rate that forms the foundation upon which different rates at which the HKMA lends Hong Kong dollar funds overnight to local commercial banks are calculated.
On Wednesday, the Fed reduced its key interest rate by 0.25 point in a bid to jump-start the economy and stave off deflation.
Hong Kong’s Financial Secretary Antony Leung said Thursday that a cut in the U.S. interest rate would benefit Hong Kong’s economy.
”A low-interest environment is important to Hong Kong because it would maintain the economic activities. For our major export markets, a lower U.S. interest rate will also have a stimulating effect,” Leung said.
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