Economic Observer reporter Lao Yingying

Recently, influenced by the interest rate hike policy of the Federal Reserve of the United States (hereinafter referred to as "the Fed"), the interest rate of US dollar fixed deposits (hereinafter referred to as "US dollar fixed deposits") of foreign banks in mainland China has significantly increased, and the annualized interest rate of multiple time limited discount products has exceeded 4%, attracting many depositors holding US dollar assets to adjust their deposit allocation. On September 16th, the Federal Reserve announced a 25 basis point increase in the target range for the federal funds rate to 3.75% -4.00%.

According to the reporter's understanding, several foreign banks that have set up branches in mainland China, such as Bank of East Asia, HSBC China, Fubon Huayi, and Popular Bank, have set thresholds for new customers and new funds. The maximum preferential interest rate for 3-month to 1-year US dollar fixed deposits can reach 4.15%. By comparison, the US dollar fixed deposit interest rates of large state-owned commercial banks, joint-stock commercial banks, and city commercial banks in mainland China are generally lower than 4%.

Following the footsteps of the Federal Reserve, the Hong Kong Monetary Authority has simultaneously raised its benchmark interest rate to 4.25%. Several banks in Hong Kong have further increased their US dollar fixed deposit interest rates, with institutions such as ICBC Asia, CITIC Bank (International), and Fubon Bank raising their annual interest rates to 4% for new capital products, and some products reaching as high as 4.35%. Different banks have significant differences in their rules regarding minimum deposit amounts and whether to limit new capital.

Multiple foreign banks in mainland China offer fixed deposit rates of 4% for US dollars

In early September, Ms. Li from Shanghai finally couldn't resist the temptation and purchased $50000 USD fixed deposit with a one-year term at a large state-owned commercial bank, with an annual interest rate of 3.8%. She felt that this interest rate was still very "fragrant". At that time, she was not sure whether the Federal Reserve would raise interest rates. If it did, she thought that the fixed deposit rate for US dollars might still increase, and she might have bought it earlier.

After the Federal Reserve raised interest rates in mid September, compared to large state-owned commercial banks, joint-stock commercial banks, and city commercial banks, the US dollar fixed deposit rates of many foreign banks have increased to over 4%. The product information released by the WeChat official account "East Asia China Wealth Management" on October 1 shows that from October 1 to October 15, new customers who subscribe for USD fixed deposit for the first time in Bank of East Asia can enjoy the new customer interest rate on the same day, of which the annual interest rate of the product with an initial deposit amount of USD 50000 and a period of three months is 4.1%. The article released by Shenzhen Branch of Volkswagen Bank on its WeChat official account on October 8 shows that the annual interest rate of the bank's six month and twelve month products for fixed deposit of US $2000 is 4% and 4.1% respectively.

In addition, other foreign banks have also launched USD fixed deposit products with a rate of over 4%. For example, at HSBC China, Premier customers who deposit 500000 RMB or its equivalent in foreign currency can enjoy preferential interest rates for fixed deposits in US dollars. A staff member of the Shenzhen branch of the bank told reporters that as of October 19th, the minimum deposit amount for new funds is $1000, and the annual interest rate for US dollar fixed deposits with a term of 3 months is 4.1%. A staff member of Fubon Huayi Bank Guangzhou Branch also told reporters that after the Federal Reserve raised interest rates in September, they launched a new phase of US dollar fixed deposit products with greater discounts. As of October 18th, for new customers with a minimum deposit of 10000 US dollars at Fubon Huayi Bank, the annual interest rates for 3-month and 6-month US dollar fixed deposits are 4.15% and 4.05%, respectively.

The account managers of multiple banks mentioned above also stated that most of the relevant preferential annual interest rates are valid until mid October. After the validity period, the annual interest rate may be adjusted, possibly remaining unchanged or decreasing.

Ms. Li told reporters that she had worked and lived in the United States before and held a considerable amount of US dollar funds. When she saw that the annual interest rate of foreign banks had reached over 4%, which was even better than the 3.8% annual interest rate for deposits in early September, she wanted to find another foreign bank to purchase US dollar fixed deposits. According to her understanding, in July, some foreign banks offered a preferential annual interest rate of 4% for new funds with a term of 1 month starting from 20000 US dollars. However, at that time, she felt that the 1-month deposit period was too short and did not deposit. Currently, the latest product of this bank has an annual interest rate of 4%. Later, she locked in another foreign bank and deposited $20000 with a six-month term and an annual interest rate of 4.05%.

Compared with foreign banks, other mainland commercial banks, even some small and medium-sized banks that previously had higher annual interest rates for US dollar deposits, have not reached an annual interest rate of 4%. The reporter learned during the interview that the annual interest rates for USD fixed deposits at Chongqing Bank for 3 months, 6 months, and 1 year are 3.7%, 3.8%, and 3.8%, respectively; The annual interest rates for USD fixed deposits at Chongqing Three Gorges Bank for 3 months, 6 months, and 1 year are 3.7%, 3.65%, and 3.6%, respectively; The annual interest rate for USD fixed deposits at Guangdong Huaxing Bank ranges from 3.25% to 3.65% for a period of one month to one year.

A depositor from Jiangsu province told reporters that in September, she had applied for a 3-month US dollar fixed deposit with an annual interest rate of 3.7%. In October, she reached an agreement with another city commercial bank account manager to offer her a 3.9% interest rate, but the minimum deposit amount required was $50000. Although the annual interest rate did not reach 4%, she still decisively withdrew the US dollars she had just deposited in September, transferred them to a bank that could offer a higher interest rate, and processed a one-year deposit period.

Multiple banks in Hong Kong offer a fixed deposit rate of 4% for US dollars

After the Federal Reserve raised interest rates, the Hong Kong Monetary Authority followed suit. On September 17th, the Hong Kong Monetary Authority issued a statement raising the benchmark interest rate by 25 basis points to 4.25%. The reporter noticed that compared with mainland banks, more banks in Hong Kong have launched USD fixed deposit products with a rate of over 4%.

Ms. Chen from Guangdong told reporters that during the National Day holiday, she traveled to Hong Kong and saw that the US dollar fixed deposit interest rate of Chong Hing Bank in Hong Kong was over 4%, with an annual interest rate of 4.1% for new customers' US dollar fixed deposits for 6 months, 9 months, and 12 months. In contrast, Ms. Chen's previous purchase of products from mainland banks had an annual interest rate of less than 3%.

Ms. Wang from Hong Kong has a habit of regularly depositing funds into ICBC Asia for savings, so she often pays attention to the bank's monthly updates on new capital fixed deposit promotion activities. She told reporters that ICBC's Asian dollar deposits are divided into two levels based on the minimum deposit amount: "15000 US dollars or more" and "100000 US dollars or more". Regardless of which level, the fixed deposit interest rate for US dollars before October was below 4%. After entering October, in the "$15000 or above" range, the annual interest rates for 98 day, 188 day, and 388 day USD deposits are 4%, 4.1%, and 4.2%, respectively; In the "$100000 or more" category, the annual interest rates for 98 day, 188 day, and 388 day USD deposits are 4.05%, 4.15%, and 4.25%, respectively.

The reporter learned through interviews and browsing the official websites of major banks in Hong Kong that currently, mainstream banks such as HSBC Hong Kong, Bank of China Hong Kong, Hang Seng Bank, and Standard Chartered Bank have launched US dollar fixed deposit discounts for new funds, with the highest annual interest rate not reaching 4%. However, there are still many banks with similar products that can reach an annual interest rate of over 4%, but the conditions that need to be met vary. For example, China Construction Bank Asia can enjoy a preferential annual interest rate of 4% if it applies for USD fixed deposits with qualified new funds of USD 100000; The entry threshold for Fubon Bank is even higher, and qualified new fund users with a minimum deposit amount of $128000 can enjoy a three-month, 4.35% annual interest rate fixed deposit discount.

In addition, the entry threshold of China CITIC Bank (International) is relatively low. New fund users who handle 3-month or 12-month USD fixed deposit business can enjoy an annual interest rate of 4%. There is no requirement for the minimum deposit amount, and the interest rate enjoyed by old fund users for similar businesses is also the same as that of new funds, which is 4%.A depositor who has opened multiple Hong Kong bank accounts including Hang Seng Bank, CITIC Bank (International), and Zhong'an Bank told reporters that he initially opened a Chinese bank account purely with a trial mentality, but did not expect the experience to be very good. New funds could be credited on the same day, and the preferential promotion interest rates for US dollar fixed deposits were higher than those of foreign banks.

In addition, in the Hong Kong region, the reporter also noticed that Dah Sing Bank and OCBC Bank (Hong Kong) have an annual interest rate of 4% for US dollar fixed deposits. The highest interest rate for new customers' US dollar fixed deposits in the former can reach 4.2%, while the annual interest rates for new funds' US dollar fixed deposits for 6 months and 12 months in the latter are 4.1% and 4.2%, respectively.

Will the Federal Reserve raise interest rates by the end of the year

Ms. Li told reporters that it is uncertain whether the Federal Reserve will raise interest rates in the future. If further interest rates are raised, the interest rate for US dollar fixed deposits will continue to rise.

On October 7th, the Microeconomic Data Center of the Federal Reserve Bank of New York released the September 2026 Consumer Expectations Survey. The survey results show that the public's expectations for recent inflation jumped to the highest level in over three years in September, while households lowered their assessments of current and future financial conditions. As the inflation outlook worsens, households expect prices for all categories tracked by the Federal Reserve Bank of New York to rise in the future, including gasoline, food, rent, healthcare, and college expenses.

On October 7th, the minutes of the September monetary policy meeting released by the Federal Reserve also showed that attending Federal Reserve officials overall expected inflation to remain high in the near future, and believed that the risk of upward inflation still existed. Most Federal Reserve officials believe that it may be appropriate for the Fed to raise its benchmark interest rate again before the end of this year, but the decision to raise rates will depend on new market information and an assessment of overall risk.

A macro analyst from a Beijing joint-stock commercial bank told reporters that the September non farm employment data in the United States showed that only 29000 new non farm jobs were added in September, far below the market expectation of 90000, and the job market is rapidly cooling down. He believes that it should be noted that this non farm payroll data may slow down the pace of interest rate hikes by the Federal Reserve, but it is difficult to change the overall direction of its tightening policy, as the minutes of the September monetary policy meeting released clear policy signals: at present, monetary policy is in a high interest rate observation window, not a policy turning point; Compared to the risk of economic downturn, the Federal Reserve is more concerned about inflation risk and may maintain high interest rates for a longer period of time. It would rather tolerate a mild economic slowdown than suppress inflation.

HashKey Group senior researcher Sun Wei also told reporters that based on the latest released minutes of the Federal Reserve's September interest rate meeting, the current benchmark scenario is that there may not be a rate hike in October, but there is still a high probability of a rate hike in December.

In Sun Wei's view, on the one hand, the current inflation in the United States is not sticky inflation caused by wages and consumption, but price increases driven by large-scale investments in oil and artificial intelligence. The weakening trend of the US labor market has not been fundamentally reversed, and this situation does not support the Federal Reserve's continuous aggressive interest rate hikes; On the other hand, the high long-term interest rates have to some extent formed a spontaneous tightening effect, which further reduces the possibility of the Federal Reserve continuing to raise interest rates in October.

Sun Wei also believes that under the trend of energy price rebound, assuming the labor market continues to decline and long-term interest rates remain high, the probability of the Federal Reserve raising interest rates in December will also decrease.

(Author Lao Yingying)