Liquidity conditions in Hong Kong resumed tightening this week with a key money-market rate climbing above a level that some analysts say may stifle a nascent economic recovery.

The benchmark one-month Hong Kong Interbank Offered Rate — or Hibor — jumped above the closely watched threshold of 3 percent on Wednesday, reaching the highest since May. If the gauge sustains above that level, it could have a negative impact on the economy as investors would become more cautious, and borrowing demand would fall, Morgan Stanley analysts wrote in a note last week.

The supply of cash is dwindling this week as banks are hoarding their reserves toward the end of the month and the quarter, said Carie Li, a global market strategist at DBS Bank in Hong Kong.

“The current interest rate is relatively high by historical standards, which means the demand for borrowing will likely be weaker,” she said. “I expect Hibor to remain elevated until the end of September due to seasonal factors. The high rates will have a more material impact on the economy if it lasts sustainably, such as for half a year.”

Hong Kong’s economy grew at the fastest pace in more than a year last quarter as local spending increased and overseas companies front-loaded imports from the city to avoid higher US tariffs.

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The interbank liquidity pool is diminishing, having dropped about 70 percent over the past two months, based on data from the Hong Kong Monetary Authority.

Funding costs have climbed this month as the HKMA defended the local dollar by buying the currency in an effort to keep it within its HK$7.75-to-HK$7.85 per dollar trading band. Meanwhile, inflows into the city’s stock market and tentative signs of a rebound in loan demand are also contributing to higher rates.

The currency may advance to the strong end of its trading band at HK$7.75 soon given the higher funding costs, according to Stephen Chiu, chief Asia foreign exchange and rates strategist at Bloomberg Intelligence in Hong Kong.

The Hong Kong dollar strengthened as much as 0.2 percent to HK$7.7755 to the US currency Wednesday.

“If Hibor averages above 3 percent for the next month, then we can fairly say that the period of excessively flush liquidity is gone,” said Albert Leung, a rates strategist at Nomura Holdings Inc. However, the economy will likely be “OK” if rates only stay high for a short while, he said.