The Hong Kong Monetary Authority announced Thursday that its base rate was adjusted downward by 50 basis points, in a move following an overnight rate cut by the Federal Reserve of the United States.

The reduction came after a 50 basis points cut in the U.S. federal funds target rate on Wednesday. "With immediate effect according to a pre-set formula," the Monetary Authority, which serves the role of central bank in the Chinese special administrative region, said in a statement.

The base rate is the interest rate forming the foundation upon which the discount rates for repurchase-agreement transactions through the discount window are computed.

The base rate in Hong Kong was currently set at either 150 basis points above the prevailing U.S. federal funds target rate or the average of the five-day moving averages of the overnight and one-month Hong Kong interbank offer rates (HIBORs), whichever is the higher.

Hong Kong dollar, the local currency, is pegged to the U.S. dollar.

(Xinhua News Agency January 31, 2008)