The Monetary Authority of Macao (AMCM) increased its overnight discount base rate by o.25% of a percentage point to 1.25%, the AMCM said in a statement issued on Thursday.
The discount rate is the interest rate that the central bank, or in this case the monetary authority, charges to lend money to commercial banks, acting as a lender of last resort.
The decision is justified by the fact that the Monetary Authority of Hong Kong on Thursday also decided to increase its benchmark rate by 25 basis points because the Hong Kong dollar is pegged to the US dollar.
The Federal Reserve of the United States decided on Wednesday to increase its own benchmark interest rate by 25 basis points to a range of between 0.75% and 1.0%.
“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,” the statement said.