The Macau Monetary Authority (AMCM) said in a statement that it raised its base rate of the discount window Thursday by 25 basis points to 1.5 percent.
It has been the fourth time for Macau’s quasi-central bank 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 Macau should be basically consistent in order to maintain the effective operation of the linked exchange rate system between the two cities, the statement said.
As a result, the statement said, the AMCM raised the base rate by 25 basis points, following its counterpart in Hong Kong.
“Meanwhile, since the Hong Kong dollar is linked to the US dollar under Hong Kong’s 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” early yesterday (Macau time), the AMCM statement said.
Interest rates of Macau 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, the statement said.
“Macau’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 Macau banks cannot be ruled out in the foreseeable future, the statement said.
“Alongside the up-cycle of interest rates, Macau banks should continue to manage and control the potential risks associated with interest-rate adjustments,” the statement said.
According to the statement, the local 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.”