Butterfield Bank Cayman has raised its prime rate for US and CI dollar lending for residential mortgages, consumer loans and corporate loans by 0.75%.
The interest rate increase follows the raising of the US federal funds rate by the same margin and takes effect 17 June.
Rates paid on fixed-term deposits with terms of 90 days or more will be increased in line with the market, the bank said.
The Federal Reserve approved the largest interest rate rise since 1994 on Wednesday to reign in escalating inflation numbers.
The US consumer price index, which in April was said to have plateaued at 8.3%, rose again to 8.6% in June. On a monthly basis prices increased by 1% between April and May.
“We at the Fed understand the hardship that high inflation is causing,” Federal Reserve Chairman Jerome Powell said in a press briefing Wednesday. “We’re strongly committed to bringing inflation back down and we’re moving expeditiously to do so.”
The Federal Reserve has lowered its growth projections for the US economy to 1.7% and expects unemployment to rise from 3.6% to 3.9% next year and 4.1% in 2024.
The Fed Funds rate – the interest rate at which banks borrow and lend to one another overnight – is now in a target range of 1.50% to 1.75%. A further interest rate hike is likely at the Fed’s July meeting. The US central bank indicated the Fed Funds rate could be higher than 3% by the end of the year.
The prime rate, the lending rate offered by banks to their most creditworthy customers, is usually set at a margin above the Fed Funds rate.
As a result, flexible rate loans and mortgages will increase in step with any Federal Reserve interest rate rises.
Detailed deposit rate information is available on Butterfield’s website and at Butterfield Banking Centres. For information regarding rates and payment terms, clients can call (345) 949 7055.
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