* HKMA raises discount window rate to 2.00 pct from 1.75 pct
* Fed sees at least two more rate increases this year
*
* HKMA says will buy HK dollar when it hits 7.85 vs dollar
By Donny Kwok
The move came as the
The Fed raised interest rates by a quarter of a percentagepoint in its first hike this year and forecast at least two morehikes for 2018, signalling growing confidence that
The HKMA sets its base rate through a formula that is 50 bpsabove the prevailing
"The
"It would be a good thing for the HK dollar interest rate tonormalise in line with the US interest rate."
In December, the HKMA raised the base rate by 25 bps to 1.75percent and the central bank chief warned at the time that
However, major banks such as HSBC andStandard Chartered later left the city's primelending rate unchanged.
None of
The
"Following the US interest rate hike, I believe the
"HKMA will guarantee that the
"As the interest rate gap has widened between
The peg was put in place in 1983 and the current tradingband was set in 2005. The system requires
Most market participants do not see this bout of weakness asa threat or attack on the peg, unlike instances in the past.
Chan said mortgage rates in one of the world's mostexpensive property markets would have to rise in the longerterm.
"Anticipation that HK interest rates will stay at a lowlevel for a long time is an inappropriate anticipation. Peoplehave to better manage their risk in borrowing money," Chan said.
Home prices in the former British colony have surged for 15straight months despite repeated cooling measures, furtherexacerbating public discontent towards housing affordability inthe city of 7.4 million.
Analysts expect home prices, which surged 16.7 percent lastyear, to climb a further 5 to 20 percent in 2018.
Reining in a red-hot property market remains a top priorityfor the local government, but prices have been rising non-stopsince 2016 despite eight rounds of mortgage tightening measureson top of tax and regulatory policies.
"Mortgage rates have been at a low level for a long time. Asinterest rates normalise, it will put pressure for a mortgagerate hike over the long term. It is a good trend for a healthydevelopment of the