BASE RATE LOWERED TO 4.75%

The Monetary Authority announced today that it has decreased the base rate to 4.75% with immediate effect.

The decrease, according to a pre-set formula, follows a 25-basis point downward adjustment in the target range for the US federal funds rate on December 18.

The base rate is the interest rate forming the foundation upon which the Discount Rates for repurchase transactions through the Discount Window are computed.

It is currently set at either 50 basis points above the lower end of the prevailing target range for the US 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.

As 50 basis points above the lower end of the prevailing target range for the US federal funds rate is 4.75%, while the average of the five-day moving averages of the overnight and one-month HIBORs is 4.2%, Hong Kong's base rate is therefore set at 4.75%.

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