June 14, 2018 / 1:34 AM / 10 months ago

HKMA says 'matter of time' before Hong Kong banks raise prime rates

FILE PHOTO: An attendant walks outside the entrance to Hong Kong Monetary Authority in Hong Kong, China November 10, 2015. REUTERS/Bobby Yip

HONG KONG (Reuters) - Hong Kong’s de facto central bank said on Thursday Hong Kong banks will raise their prime rates or best lending rates soon, as the Hong Kong interbank offered rates (HIBOR) trend up tracking higher U.S. interest rates.

“The trend of a rising HIBOR is clear. I believe it is just a matter of time that banks will increase the saving deposit rates and the best lending rates,” said Norman Chan, chief executive of the Hong Kong Monetary Authority (HKMA).

HKMA raised the base rate charged through its overnight discount window by 25 basis points on Thursday to 2.25 percent after the U.S Federal Reserve raised interest rates by a quarter of a percentage point.

Fed projects two more rate rises this year, and another three hikes next year.

“Many people are concerned about the overheating of Hong Kong’s property market. Hong Kong dollar interest rate normalization will be conducive to a more healthy development of the asset markets including the property market in Hong Kong, but some volatility is unavoidable in the process,” Chan added.

Reporting by Donny Kwok; Editing by Richard Borsuk

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