Macau, the small peninsula known for its giant casinos and shopping malls, raised its benchmark discount rate by 25 basis points to 2.0 percent, tracking Hong Kong's rate hike.
Macau's de-facto central bank, the Monetary Authority of Macao (AMCM), said as its pataca currency is linked to the Hong Kong dollar, changes in policy rates in Hong Kong and Macau should be consistent in order to maintain the linked exchange rate system.
Earlier today the Hong Kong Monetary Authority (HKMA) raised its base rate by 25 basis points to 2.0 percent in response to the U.S. Federal Reserve's 25-point rate hike on March 21. The Hong Kong dollar is pegged to the U.S. dollar.
AMCM said local market interest rates would gradually move up this year in view of the external and financial market developments and it wants to remind the public that higher mortgage rates will increase the financial burden of borrowers, "hence, those that rely on mortgages for property purchases should prudently assess their repayment ability."
"Meanwhile, local banks should assess the impacts of interest-rate adjustments on their operating positions and properly manage the potential risk," AMCM added.
Macau was part of Portugal until 1999 when it became an autonomous region of China, under the same "one country, two systems" policy that saw Hong Kong revert back to China in 1997. Macau is only 62 kilometers from Hong Kong.
Under the agreement between Portugal and China, Macau is guaranteed its own monetary and legal system until 2049.
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