The Monetary Authority of Macao (known by the Portuguese initials AMCM) announced today yesterday a reduction in the base rate of the discount window by 25 basis points, setting the new rate at 4.50 percent. This adjustment represents the first policy rate decrease implemented by the AMCM this year.
The base rate is the foundational interest rate set by a central bank or de facto central bank — such as the AMCM – upon which the rates for repurchase transactions through the discount window are calculated. A discount window, in turn, is a facility that allows eligible banks and financial institutions to borrow short-term funds (typically overnight) to meet temporary liquidity needs.
The decision by the AMCM to lower its base rate is directly linked to a parallel action taken by the Hong Kong Monetary Authority (HKMA). Given the linked exchange rate system that connects the Macao pataca to the Hong Kong dollar, interest rate movements in both regions need to remain closely synchronised to ensure the stability and effective functioning of the currency peg.
The HKMA’s rate adjustment followed the US Federal Reserve’s decision on 17 September to also reduce interest rates.
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Throughout the first seven months of 2025, the prime lending rate among Macao’s banks has largely remained stable at 5.51 percent. With the US Federal Reserve now having initiated its first interest rate cut for the year, there is scope for potential downward adjustments in Macao’s domestic lending rates.
Such a reduction is anticipated to ease the financial burden on corporate borrowers and mortgage holders, while also decreasing overall financing costs, which is expected to help stimulate the local economy.
In light of ongoing global economic uncertainties, the AMCM advises both businesses and individuals to conduct thorough assessments of their financial capacity when applying for credit facilities, including mortgages. The Authority has stated its commitment to continuously monitor the operational health and risk profiles of Macao’s banking sector, urging institutions to diligently manage and address associated risks.
This article was drafted by AI before being reviewed by an editor.
