Tuesday, the Hong Kong Monetary Authority said in a report that the composite interest rate dropped 4 basis points to 0.29% at the end of March from 0.33% at the end of February. The composite interest rate is a measure of the average cost of funds of banks.
The monetary authority said the decline in the composite interest rate in March was mainly brought about by downward adjustments in time deposit rates, which more than offset the increases in short-term inter-bank rates. Further, the monetary authority said an increase in liquidity in the banking system was responsible for the fall in the banks' average funding costs.
Looking ahead, the composite interest rate will continue to be influenced by domestic as well as external monetary conditions, Peter Pang, Deputy Chief Executive of the HKMA said in a statement.
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