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HONG KONG, June 15 (Reuters) - Hong Kong's central bank chief said on Thursday he expects banks in the city to raise interest rates gradually and there could be an increase in capital outflows from the financial hub due to arbitrage plays with the local currency.
Hong Kong Monetary Authority (HKMA) chief executive Norman Chan, speaking after the U.S. Federal Reserve raised interest rates, also warned residents to tread cautiously in the property market as mortgage repayments were likely to increase.
The Hong Kong Monetary Authority on Thursday raised the base rate charged through its overnight discount window by 25 basis points to 1.50 percent.
The Hong Kong dollar is pegged to the U.S. dollar and the HKMA tends to follow monetary policy set by the U.S. Federal Reserve. (Reporting By Donny Kwok and James Pomfret; Editing by Kim Coghill)