The Macau Monetary Authority (AMCM) on Monday lowered its base rate (BR) of the discount window by 64 basis points to 0.86 per cent.
It was the second time this month for Macau’s quasi-central bank to lower its policy rate. On March 4, it lowered the rate by 50 basis points to 1.50percent.
The regulator said in today’s statement that “as the pataca is linked to the Hong Kong dollar, the movements of policy rates in Hong Kong and Macau 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 adjust its base rate,” the statement said, adding that “under the linked exchange rate system between the Hong Kong dollar and the US dollar, the Hong Kong Monetary Authority[HKMA] lowered its base rate according to a pre-set formula, in response to the policy action by the US Federal Reserve to lower the Fed funds rate target range by 100 basis points on March 15, 2020 (US time).”
According to Investopedia, the discount window is a central bank lending facility meant to help commercial banks manage short-term liquidity needs.
The base rate is the rate of interest used by the AMCM as a basis for charging for loans.
The AMCM is overseen by the local government’s Secretariat for Economy and Finance.