HONG KONG, March 16 (Reuters) - The Hong Kong Monetary Authority on Thursday raised the base rate charged through its overnight discount window by 25 basis points to 1.25 percent.
The move from Hong Kong’s de facto central bank followed the U.S. Federal Reserve’s decision to raise interest rates on Wednesday for the second time in three months, a move spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank’s target.
Hong Kong tracks U.S. rate moves as its currency is pegged to the U.S. dollar.
The monetary authority sets its base rate through a formula that is 50 basis points above the prevailing U.S. Fed Funds Target or the average of the five-day moving averages of the overnight and one-month HIBORs (Hong Kong Inter-bank Offered Rate). (Reporting by Donny Kwok; Editing by Richard Pullin)