Interest rates are likely to hold steady amid a softening Hong Kong dollar with the banking system awash in liquidity.
More than US$130 billion have flowed into the financial system in the past few years, the Hong Kong Economic Journal reports, citing the Hong Kong Monetary Authority (HKMA).
The Hong Kong unit is trading around 7.80 against the greenback, its lowest level since 2011.
HIBOR (Hong Kong interbank offered rate), the interest rate banks charge each other for loans, rose to a two-year high for one-month borrowing and was the highest in five and a half years for one-year credit.
Hong Kong benchmark rates will move closer to the US Fed fund rate only if a large amount of capital leaves the financial system, HKMA chief executive Norman Chan said.
Given plenty of liquidity, real interest rates remain low, keeping the cost of overnight interbank borrowing relatively stable, said Andrew Fung, executive director and head of global banking and markets of Hang Seng Bank Ltd. (00011.HK).
Ivy Wong, managing director of Centaline Mortgage Broker Ltd., said HIBOR-based mortgage rates to which more than 80 percent of mortgage loans are linked will be little affected.
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