Bank of China (BOC) Hong Kong said Thursday it would not raise its prime lending rate despite an increase by the U.S. Federal Reserve overnight.

"We have decided to leave the prime rate unchanged (at 5.125 percent), taking current market conditions into consideration," a bank spokeswoman said.

Hong Kong tends to track U.S. rate moves because its currency is pegged to the U.S. dollar. However, analysts believe its local banks may not follow the rate increase this time because the banking system is awash with cash and loan demand is soft.

The Hong Kong Monetary Authority on Thursday raised the base rate charged through its overnight discount window by 25 basis points to 3.50 percent after the U.S. Federal Reserve lifted its benchmark federal funds overnight bank lending rate by a quarter percentage point to 2 percent.

(Shenzhen Daily/Agencies)