The Hong Kong Monetary Authority raised its base rate by 25 basis points to 2.75 percent on December 20th, 2018, tracking a similar move by the US Federal Reserve as its currency is pegged to the US dollar. The central bank sets its base rate through a formula that is 50 basis points above the prevailing US Fed Funds Target or the average of the five-day moving averages of the overnight and one-month HIBORS (Hong Kong Interbank Offered Rate), whichever is higher. Regarding increasing downside risks to the economy from ongoing trade row between China and the US, the monetary authority urged residents to remain vigilant for possible market volatility after US interest rate hikes. Interest Rate in Hong Kong averaged 3.37 percent from 1998 until 2018, reaching an all time high of 8 percent in May of 2000 and a record low of 0.50 percent in December of 2008.
Interest Rate in Hong Kong is expected to be 2.75 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Hong Kong to stand at 3.00 in 12 months time. In the long-term, the Hong Kong Interest Rate is projected to trend around 3.75 percent in 2020, according to our econometric models.