The Monetary Authority of Macao (AMCM), the city’s de facto central bank, today raised the base rate for the discount window by 50 basis points to 1.25 per cent.
The discount window is a lending instrument that allows eligible institutions to borrow money from the central bank – usually on a short-term basis – in the wake of temporary shortages of liquidity.
As the Macao pataca is linked to the Hong Kong dollar, the movements of policy rates in Hong Kong and Macao should be consistent in order to maintain effective operation of the linked exchange rate system, according to AMCM, 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 50 basis points on 4 May (US time).
