rate by 0.25 percent to 6.5 percent.

This represents the benchmark for pricing Bank of Bermuda loans in Bermuda dollars.

The interest rate on the Bank's Bermuda dollar statement savings accounts will also rise by 0.25 percent to 4.25 percent.

Bermuda Home, a Bank subsidiary, is raising the interest on its demand savings accounts from four percent to 4.25 percent and on its 30-day savings accounts from 4.25 percent to 4.5 percent.

In addition, Bermuda Home is raising its variable mortgage rates by 0.25 percent.

These rate changes are effective as of today.

Bank of Bermuda Senior Vice President for Retail Clients Danny Fox said: "Our increase is in response to the rise in short term US interest rates following the decision by the Federal Reserve Board to raise the federal funds rate.

"We find it necessary to closely align our local rates to those prevailing in the United States.''