Hong Kong banks' prime rates will not immediately rise after Fed hike

Banks have enough money to delay its implementation.

Hong Kong banks’ sufficient liquidity at home and abroad can delay immediate prime rate hikes even as the Fed moves to raise its benchmark interest rate with the Federal Open Market Committee looming closer.

The FOMC holds eight regularly scheduled meetings yearly to review economic and financial conditions, determine the appropriate stance of monetary policy, and assess market risks.

“Nevertheless, before global monetary tightening accelerates and fuels capital outflows from HK, banks may still refrain from hiking prime rates given ample liquidity at home and abroad. In other words, we expect prime rate will not be lifted right after March FOMC,” said OCBC Bank in its weekly macro views research report.

This comes as big banks like HSBC, BOC and Hang Seng Bank respectively recently locked their mortgage rates amidst the market consensus that the prime rate is set to rise following the HIBOR’s projected increase.