Prime Interest Rates And Inflation Both Increase

November 2005 | Economic Analysis

The Hong Kong dollar is pegged to the US dollar. As a result, changes in Hong Kong's prime lending rate usually follows movements in the US Federal Funds rate. Since early 2005, US interest rates have regained their influence over Hong Kong interest rates. This, however, followed a period of approximately 18 months (starting in mid-2003) when movements in the two rates, mainly because of exceptional liquidity conditions in Hong Kong, became detached.

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