The Monetary Authority of Macao (AMCM) raised the Base Rate of the Discount Window today (15 June 2017) by 25 basis points to 1.5%. It has been the fourth time for the AMCM to raise the policy rate since December 2015.
As the pataca is linked to the Hong Kong dollar, the movements of policy rates in Hong Kong and Macao 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. Meanwhile, since the Hong Kong dollar is linked to the US dollar under the linked exchange rate system, the rate hike action of Hong Kong was attributed to the decision of the US Federal Reserve raising the Fed funds rate by 25 basis points on 14 June (US time).
Interest rates of Macao 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. Macao’s loan and deposit rates remain relatively stable at the current stage. Nevertheless, if the uptrend of interest rates persists, uplifting loan and deposit interest rates by Macao banks cannot be ruled out in the foreseeable future.
Alongside the up-cycle of interest rates, Macao banks should continue to manage and control the potential risks associated with interest-rate adjustments. Meanwhile, the SAR Government would like to remind the public to be alerted to the potentially enlarging volatility of the real estate market, assess prudentially their financial positions, such as the extra burden on their mortgage payments due to rising interest rates, act within their means for property purchases and manage the risks well.