The composite interest rate fell to 2.86% at the end of December, from 3.02% at the end of November, the Monetary Authority says.

The 16 basis-point cut followed a one basis-point dip in November. This reflected the general decline of interbank rates following the completion of a number of initial public offerings near the end of November.

In December, Hong Kong Interbank Offered Rates for funds with maturity of three months or less fell 10 to 78 basis points, while those for funds with maturity over three months also fell 10 to 17 basis points.

Since US interest rates started climbing in the middle of 2004, the composite interest rate has gone up 262 basis points, compared with the upward adjustments of between 275 and 300 basis points in the best lending rates of banks by the end of December last year.