The Hong Kong Monetary Authority (HKMA) announced on 22 September that the Base Rate was adjusted upward to 3.50% with immediate effect according to a pre-set formula.

The Base Rate is the interest rate forming the foundation upon which the Discount Rates for repurchase transactions through the Discount Window are computed.  The Base Rate is currently set at either 50 basis points above the lower end of the prevailing target range for the US federal funds rate or the average of the five-day moving averages of the overnight and one-month Hong Kong Interbank Offered Rates (HIBORs), whichever is the higher.

Following the 75-basis point upward adjustment in the target range for the US federal funds rate on 21 September (US time), 50 basis points above the lower end of the prevailing target range for the US federal funds rate is 3.50%, while the average of the five-day moving averages of the overnight and one-month HIBORs is 1.82%.  The Base Rate is therefore set at 3.50% according to the pre-set formula.

Five of Hong Kong's largest banks also raise their prime rates for the first time in four years. The best lending rate of HSBC, Bank of China (Hong Kong) and Hang Seng Bank will rise by 12.5 basis points to 5.125%. Prime rates of Standard Chartered and Bank of East Asia will increase to 5.375%.