Major Hong Kong banks held their prime lending rates steady Thursday after the U.S. Federal Reserve's decision overnight to leave its benchmark interest rates near zero.

Analysts said they doubt local lenders will raise their prime rates during the next six months.

"The global recovery is still a long way off. Most policymakers don't want to increase the rates casually because it might deter the progress of recovery," Standard Chartered Bank economist Simon Wong said.

He said he doesn't expect the U.S. to start a rate-tightening cycle until the first quarter of 2011.

But Jasmine Lai, an analyst at DBS Vickers Securities, said she expects the Fed to start hiking interest rates in the second quarter next year, tracking stabilization in the U.S. economy. In the meantime, local banks aren't likely to cut their interest rates further.

"Since the savings deposit rates of many local lenders are already near zero and there is no room for banks to lower their funding costs, there is no room for more prime rate cuts," Lai said.

Several local banks said Thursday they were leaving their interest rates steady after the Hong Kong Monetary Authority said earlier in the day it was keeping its base rate unchanged at 0.50% following the Fed's decision.

The territory's currency peg to the U.S. dollar bolts its monetary policy to that of the U.S., so the HKMA generally follows any interest rate decisions by the Fed.

HSBC Holdings PLC (HBC) unit Hongkong & Shanghai Banking Corp. said Thursday it was leaving its prime lending rate unchanged at 5.00%; Hang Seng Bank Ltd. (0011.HK), another HSBC unit, and BOC (Hong Kong) Ltd. (2388.HK) also held their prime rates steady at 5.00%.

HKMA Chief Executive Joseph Yam told reporters the Fed's decision indicates the U.S. economy will take longer than previously expected to stabilize and recover.

He said the U.S. economy is undergoing a structural change from spending to saving, which could benefit the U.S. in the long term. "But in the near term, we should face the fact that there won't be a fast recovery in U.S. consumption," Yam said.

The Fed's policy-setting board voted overnight to keep the target federal funds rate unchanged at zero to 0.25%.

Hong Kong's de facto central bank has pledged to keep its base rate - the reference rate for the lending of overnight funds to local banks through its discount window - fixed at 0.5 percentage point above the federal funds rate.

-By Chester Yung, Dow Jones Newswires; 852-2802-7002; chester.yung@dowjones.com