The Monetary Authority of Macao (AMCM) raised the base rate for the discount window by 75 basis points from 1.25 to 2 per cent today.
According to AMCM, as the Macao pataca is linked to the Hong Kong dollar, the movements policy rates in Hong Kong and Macao should be “basically consistent” in order to maintain effective operation of the linked exchange rate system, which followed the Hong Kong Monetary Authority to adjust its base rate.
Under the linked exchange rate system between the Hong Kong dollar and the US dollar, the related policy rate adjustment of Hong Kong was based on the policy action by the US Federal Reserve to raise the Fed funds rate target range by 75 basis points on 15 June (US time).
A lending instrument in the wake of a temporary shortages of liquidity, the discount window allows eligible institutions to borrow money from the central bank, usually on a short-term basis.
The AMCM is the Macao’s de factor central bank.