The Hong Kong Monetary Authority announced on Thursday that the base rate has been set at 5.75 percent with immediate effect according to a pre-set formula.

According to the monetary authority, 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 U.S. 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 25-basis point upward adjustment in the target range for the U.S. federal funds rate on July 26 (U.S. time), 50 basis points above the lower end of the prevailing target range for the U.S. federal funds rate is 5.75 percent, while the average of the five-day moving averages of the overnight and one-month HIBORs is 4.78 percent. The base rate is therefore set at 5.75 percent according to the pre-set formula.

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