HKMA cuts composite interest rate
(22 July 2015 – Hong Kong) The Hong Kong Monetary Authority (HKMA) cut its composite interest rate at the end of June 2015.
In a statement on 17 July, the HKMA said it decreased the composite interest rate by 2 basis points to 0.29 percent from 0.31 percent at the end of May 2015.
The statement said the decline in the composite interest rate in June mainly reflected decreases in the weighted funding cost for both deposits and interbank funds.
The composite interest rate is a measure of the average cost of funds of banks.
This is a weighted average interest rate of all Hong Kong dollar interest bearing liabilities, which include deposits from customers, amounts due to banks, negotiable certificates of deposit and other debt instruments, and Hong Kong dollar non-interest bearing demand deposits on the books of banks.
Data from retail banks, which account for about 90 percent of the total customers’ deposits in the banking sector, are used in the calculation.
There are various other costs involved in the making of a loan, such as operating costs (e.g. staff and rental expenses), credit cost and hedging cost, which are not covered by the composite interest rate.
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