Limited action to Fed Funds rate hike, so far – The Royal Gazette | Bermuda News, Business, Sports, Events, & Community

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Limited action to Fed Funds rate hike, so far

Only one Bermuda bank has taken action since the largest interest rate hike by the Federal Reserve in more than two decades.

The midweek hike of 50-basis points in the US Federal Funds Rate led to near immediate action from Butterfield Bank, raising its interest rates on loans and selected deposits Thursday.

The Fed is expected to consider further rate increases in the future.

Bermuda Commercial Bank and HSBC Bermuda have both continued to deliberate on their course of action.

Bermuda Commercial Bank said: “As a Bermuda bank serving both local and international customers, the US Fed Funds rate is one of the many factors that we consider in the composition of our deposit and lending rate reviews.

”We will continue to review these rates and should there be any changes then we will advise the community. At Bermuda Commercial Bank we strive to provide the best solutions for our customers in achieving their financial goals.”

Nothing yet from Clarien Bank, but HSBC Bermuda said it too considered other factors besides the Fed rates in ongoing reviews of the bank’s lending and savings rates.

They said: “No decision has been made on lending rates and, should there be any decision in the future, such will be communicated through our usual channels.”

Meanwhile, Butterfield said the base rate for their Bermuda dollar residential mortgages, consumer loans, corporate loans and US dollar loans were increased by half one per cent immediately.

The rate increase on Bermuda residential mortgages will take effect on August 5.

Selected deposit rates with terms of 90 days or more will be increased in line with market rates.

The Fed decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet the Fed said was issued in conjunction with their statement.

The federal funds rate is the central interest rate in the US financial market. It influences the rate banks charge their customers with higher credit ratings (prime rate) and also longer- term interest rates such as mortgages, loans, and savings.

Banks are studying last week’s rate hike by the Federal Reserve Board. Butterfield, so far, is the only Bermuda bank to take action

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Published May 09, 2022 at 8:13 am (Updated May 09, 2022 at 8:13 am)

Limited action to Fed Funds rate hike, so far

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