Macao composite interest rates rise reflecting higher funding costs for local banking sector


24th May 2023 – (Macao) The Monetary Authority of Macao has announced that the composite interest rates for the pataca (MOP) and the Hong Kong dollar (HKD) have increased from 1.53 percent and 2.81 percent at the end of 2022 to 1.69 percent and 3.03 percent, respectively, at the end of March this year. This represents an increase of 17 basis points and 21 basis points for the MOP and HKD, respectively, reflecting an overall rise in the funding costs of the local banking sector in the first quarter of 2023.

The composite interest rates for Macao are calculated as the weighted average interest rates of all interest-bearing liabilities and non-interest-bearing demand deposits on the books of local banks. This data indicates a general trend of rising interest rates in the region, which has implications for borrowers and investors in Macao’s financial markets. The increase in interest rates may lead to higher borrowing costs for consumers and businesses, which could impact economic growth. On the other hand, higher interest rates may attract foreign investors seeking higher returns on their investments, which could benefit the financial sector and the broader economy.

The rise in interest rates is likely due to a combination of factors, including changes in global monetary policy, inflationary pressures, and supply and demand dynamics in Macao’s financial markets. Macao’s economy has been recovering from the impact of the COVID-19 pandemic, with strong growth in the gaming and tourism sectors. However, the pandemic continues to pose risks to the economy, and the rise in interest rates may reflect concerns about inflation and the need to maintain financial stability.

The Monetary Authority of Macao has indicated that it will continue to monitor developments in the local banking sector and take appropriate measures as needed to support economic growth and financial stability. This may include adjusting monetary policy, implementing regulatory measures to manage risks, and providing support to banks and other financial institutions.