The composite interest rate rose from 2.33% at the end of September to 2.88% at the end of December, before edging down to 2.84% at the end of January, the Monetary Authority says.

The 55-basis-points rise in the composite rate at the end of December was primarily due to the rise in deposit rates. The savings deposit rate, which moved largely in tandem with the best lending rate, rose 75 basis points during the last quarter of 2005. Interbank interest rates rose modestly during the period.

As deposit rates remained steady in January, the mild decline in the composite interest rate towards the month's end mainly reflected a downward adjustment in interbank interest rates during the month.

The authority's deputy chief executive Peter Pang said the composite interest rate's recent movement, in particular the mild decline at the end of January, shows the rate reflects the average cost of funds of banks and the easing liquidity condition in the Hong Kong-dollar market.

The historical data of the composite interest rate from the fourth quarter of 2003 to the end of January 2006 is available in the Monthly Statistical Bulletin on the authority's website.