The base rate for the discount window in Macao has been raised by the Monetary Authority of Macao (AMCM) from 2 to 2.75 per cent today.
According to AMCM, the increase by 75 basis points is consistent with Hong Kong as the Macao pataca is linked to the Hong Kong dollar. Hence, to maintain the effective operation of the linked exchange rate system, AMCM 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, Hong Kong’s policy rate adjustment was based on the policy action by the US Federal Reserve, which raised the Fed funds rate target range by 75 basis points on 27 July.
The discount window is a lending instrument in the wake of temporary shortages of liquidity, which allows eligible institutions to borrow money from the central bank, usually on a short-term basis.
Last month, AMCM – Macao’s de facto central bank – raised the city’s discount window base rate by 75 basis points to 2 per cent, while in May the rate was adjusted by 50 basis points to 1.25 per cent.