Bermuda's banks have remained tight-lipped about plans to cut interest rates after the US Federal Reserve slashed its interest rates by half a percent for the first time in four years.

Butterfield Bank refused to be drawn on the matter, while the Bank of Bermuda said it was still weighing up their options.

In the past the Island's banks have increased interest rates in accordance with the rise in the US interest rates.

A Bank of Bermuda spokesperson said: "We are currently examining our options and will make a decision we deem appropriate for the local market given the current environment."

Overall financial global markets rose sharply yesterday in response to the Fed's decision to cut interest rates from 5.25 percent to 4.75 percent on Tuesday, with major US share indexes ahead in early day trading, and the Dow Jones up by 0.69 percent and the Nasdaq 0.83 percent higher. The broader S&P was also ahead by 0.89 percent.

In Europe, London's FTSE 100 closed 2.81 percent higher, while French and German markets gained 3.27 percent and 2.32 percent respectively and earlier in the day Japan's Nikkei index closed up 3.7 percent, while Hong Kong's Hang Seng index climbed 4.2 percent.

Analysts had expected a cut to prevent a housing market downturn and the credit crunch from hitting the economy, but the size of the cut surprised many, with a number even previously arguing that the Fed should leave rates alone to focus on controlling inflation.

In particular, fears that the recent problems in the US mortgage market may impact on America's economic growth have depressed Japanese share prices.

In Tokyo, where Japan's central bank kept interest rates on hold yesterday, the Nikkei 225 index jumped 579.74 points to close at 16,381.54 points, having lost some of the momentum seen in morning trading.

Elsewhere, the Hang Seng index closed up 977.8 points, or four percent, at 25,554 while India's Sensex added 4.2 percent to finish on a record high.

US shares also performed well immediately after the Fed's move, with the Dow Jones industrial average rising 2.5 percent to 13 739.39, the S&P 500 Index adding 2.9 percent to 1,519.78 and the Nasdaq increasing 2.7 percent to 2,651.66 already by the close of trading on Tuesday.