The composite interest rate rose 0.04% to 3% at the end of May, following a fall of four basis points in April, the Monetary Authority says.

The rise in the average cost of funds in May reflected the upward adjustments in interbank interest rates, while savings deposit rates were unchanged. HIBORs rose across-the-board by eight to 43 basis points.

The composite interest rate has grown by 276 basis points since the current up-cycle of US interest rates started in mid-2004. Hong Kong banks' best lending rates have risen between 275 and 300 basis points.

Due to a string of upcoming initial public offerings such as fund-raising activities, the liquidity conditions in the interbank market tightened again in the past few days. The rate is expected to continue to be affected by short-term changes in liquidity conditions.