The Monetary Authority of Macao (AMCM) raised the Base Rate of the Discount Window today (16 March) from 1.0% to 1.25%.
The US Federal Reserve decided to raise the Fed funds rate by 25 basis points to 0.75%-1.0% on 15 March (US time). Since the Hong Kong dollar is linked to the US dollar, the Hong Kong Monetary Authority adjusted upwardly the Base Rate of the Discount Window by 25 basis points today. Meanwhile, 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 correspondingly raised the Base Rate by 25 basis points.
Macao’s interest rates on the retail level, including loan and deposit rates, would be influenced by future developments in the money market. Although Macao’s money market rates are relatively stable at the moment, the likelihood of higher loan and deposit rates would be increased over the year if the USA continues to raise its interest rates as expected.
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 reminds residents to assess prudentially their financial positions, including the effect of rising interest rates on extra burden on their mortgage payments. Those who consider using new mortgages for property purchase or investment should act within their means. The AMCM will continue to monitor the development of the global financial market, especially the impacts of rising interest rates on local asset prices and the SAR’s financial system. The AMCM will maintain close communication with the banking industry to safeguard Macao’s financial stability.