Macao's Base Rate of the Discount Window Raised to 2.25%

The Monetary Authority of Macao (AMCM) raised the Base Rate of the Discount Window today (14 June) by 25 basis points to 2.25%.

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. As a result, the AMCM followed its Hong Kong counterpart to raise the Base Rate by 25 basis points, as the US Federal Reserve raised the Fed funds rate target range by 25 basis points on 13 June (US time). The Hong Kong dollar is linked to the US dollar under a similar linked exchange rate system.

Local money-market interest rates have broadly moved up since the Base Rate was raised by 25 basis points to 2.0% on 22 March this year. It is expected that Macao banks would gradually adjust deposit and lending rates at the retail level along with developments of the financial market and funding costs.

The SAR Government would like to remind the public that the gradual upward adjustment of mortgage interest rates would increase mortgagors’ financial burden; hence, those who rely on mortgages for purchasing properties should prudently assess their repayment ability. Borrowers of other types of loans should also pay attention to the financial risk associated with rising interest rates, and conduct relevant cost analysis and cash-flow planning. Meanwhile, local banks should assess the impacts of interest-rate adjustments on their operations and reinforce the management of potential risks.

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