Butterfield Bank became the latest bank to announce it will reduce its interest rates, following in the footsteps of the Bank of Bermuda and Capital G Bank.

The bank cut its Bermuda Dollar Base Rate by 0.75 percent, to 4.25 percent, with effect from today, while customers with existing variable rate residential mortgages will see a 0.75 percent reduction in their interest rates from Monday June 23.

This reduction follows an announcement in January of a 0.25 percent cut to variable rate residential mortgages which will take effect on Tuesday April 22.

The Bank of Bermuda's decided to reduce interest rates for all mortgages, personal loans and commercial loans by 0.5 percent on Tuesday, and on Wednesday Capital G announced a cut of 0.5 percent in its lending rate for Bermuda dollar loans in response to the US Federal Reserve rate cut on Tuesday.

On Wednesday, the pound fell against the euro and the dollar after expectations were raised of an imminent cut in interest rates, with the minutes from the latest meeting of the Bank of England's interest rate setting committee showing two members voting for an immediate cut, and the previous day the Fed cut US interest rates to 2.25 percent from three percent in a bid to restore confidence to nervous financial markets and boost the ailing economy.

Richard Ferrett, chief financial officer and executive vice-president of Butterfield Bank, said: "We are pleased to pass on the benefits of lower US interest rates to our customers who borrow from us at rates linked to the bank's Bermuda Dollar Base Rate."

Customers with personal loans and mortgages at fixed rates of interest will be unaffected by the change.