The Monetary Authority of Macao (AMCM) raised the Base Rate of the Discount Window today (22 March 2018) by 25 basis points to 2.0%.      

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 21 March (US time).  The Hong Kong dollar is linked to the US dollar under a similar linked exchange rate system. 

In view of the recent development of the external economic and financial-market environment, local money-market interest rates would gradually move up in the current year.  Macao banks would adjust their deposit and lending rates at the retail level according to market developments.  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 rely on mortgages for property purchases should prudently assess their repayment ability.  Meanwhile, local banks should assess the impacts of interest-rate adjustments on their operating positions and properly manage the potential risk.