The Bank of Bermuda announced yesterday that it will not increase either its personal or commercial base rates despite the increase by the US Federal Reserve of its base rate.

The Island's interest rate structure is tied to global markets, and the bank uses short term US interest rates as the benchmark for pricing its commercial loans, mortgages, consumer loans and overdrafts.

Head of Banking Services Michael Collins said yesterday: "We have effectively passed on a full one percent rate reduction to our personal borrowers over the past few months.

"On April 27, we announced a unilateral rate reduction of 0.50 percent on all existing and new personal loans, including mortgages. Our recent decisions do not raise interest rates in parallel with the Fed, and have saved borrowers another .50 percent. This pricing strategy supports our determination to play an important role in the expansion of the residential mortgage market in Bermuda."