Macau’s discount window base rate has been lowered by 25 basis points to 2.5 per cent, the Monetary Authority of Macao (AMCM) announced on Thursday.
The discount window is an instrument of monetary policy that allows eligible institutions to borrow money from the central bank or another monetary authority, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions.
According to the Macau Post Daily, the announcement by Macau’s quasi-central bank pointed out that as the pataca is pegged to the Hong Kong dollar and the movements of policy rates in the two special administrative regions should be basically consistent, it followed the Hong Kong Monetary Authority (HKMA) to lower the discount window base rate, which ended the local policy rate up-cycle which began in December 2015.
The Hong Kong dollar is linked to the US dollar under a similar linked exchange rate system.
The US Federal Reserve on Wednesday lowered its interest rate for the first time since the 2008 global financial crisis, trimming the target for the US federal funds rate by 25 basis points to a range between 2.00 per cent to 2.25 per cent.