The composite interest rate fell to 0.69% at the end of December, from 0.86% at the end of last November, the Monetary Authority says.

Following a fall of 42 basis points in November, the 18-basis-point fall in the December composite interest rate reflected drops in interbank and time-deposit rates.

"The ample liquidity in the interbank market, following the substantial increase in the aggregate balance of the banking system and subsequently the fall in interbank rates, has led to the consecutive decline in banks' average cost of funds," Monetary Authority Deputy Chief Executive Peter Pang said today.

He expected the composite interest rate will continue to be affected by domestic liquidity and global financial market conditions.

In December, local interbank offering rates fell 35 to 105 basis points across the board.

Past composite interest rate data is available from the authority's Monthly Statistical Bulletin.