Dec. 12 (Bloomberg) -- The Hong Kong Monetary Authority lowered its base rate for overnight lending to 5.75 percent after the U.S. Federal Reserve cut borrowing costs.

The Fed reduced its benchmark rate by a quarter point to 4.25 percent yesterday. Hong Kong's currency is pegged to the U.S. dollar at about HK$7.8. That typically means the city's monetary policy follows that of the Federal Reserve.

Hong Kong's de facto central bank, which has tied its currency to the U.S. dollar since 1983, sets its base rate by adding 1.5 percentage points to the Fed's overnight lending rate.

To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net

Last Updated: December 11, 2007 19:44 EST