HSBC raises Hong Kong prime rate for the first time in a decade, ending era of cheap funds

October 5, 2018

HSBC has become the first commercial bank to raise its prime rate in Hong Kong, taking its cue from the US Federal Reserve and the Hong Kong Monetary Authority in ending a decade of cheap capital.

The base lending rate for borrowers will be raised by 12.5 basis points to 5.125 per cent, from 5 per cent, effective September 28, HSBC said in a statement. The savings rate on local currency deposits will be raised by 12.4 basis points to 0.125 per cent, from 0.001 per cent.

The moves follow a 25-basis point increase in base lending rate overnight by the US Fed, which was mirrored by an increment of the same magnitude by the HKMA.

The base lending rate is the interest the HKMA charges commercial banks, which must closely follow any changes with the US Fed rate to maintain the local currency’s peg to the US dollar.

Source：SCMP.com

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