HONG KONG - HONG KONG'S biggest bank HSBC said on Tuesday it saw room to cut Hong Kong prime lending rates now that interbank rates have fallen.

'We have to wait and see what happens. HIBOR has come down, there may be some room (to cut rates),' Mr Sandy Flockhart, CEO of HSBC Asia-Pacific, told reporters in Hong Kong.

Hong Kong's currency peg with the US dollar forces the territory to officially track US rate moves but local banks have some leeway to lag US rate moves and have ignored most recent cuts in the US federal funds rate.

The US Federal Reserve is widely expected to cut interest rates at a meeting next week, potentially paving the way for Hong Kong banks to cut rates.