Hong Kong's central bank raises base rate by 25 basis points

HONG KONG, March 16 (Reuters) - The Hong Kong Monetary

Authority on Thursday raised the base rate charged through its

overnight discount window by 25 basis points to 1.25 percent.

The move from Hong Kong's de facto central bank followed the

U.S. Federal Reserve's decision to raise interest rates on

Wednesday for the second time in three months, a move spurred by

steady economic growth, strong job gains and confidence that

inflation is rising to the central bank's target.

Hong Kong tracks U.S. rate moves as its currency is pegged

to the U.S. dollar.

The monetary authority sets its base rate through a formula

that is 50 basis points above the prevailing U.S. Fed Funds

Target or the average of the five-day moving averages of the

overnight and one-month HIBORs (Hong Kong Inter-bank Offered

Rate).

(Reporting by Donny Kwok; Editing by Richard Pullin)