percent.

The Bank of Bermuda and Bank of Butterfield hope their move will boost the sluggish economy.

Also cutting rates by an identical amount are Bermuda Mortgage & Finance, and Butterfield Mortgage & Finance.

The reductions -- effective today -- relate to Bermuda dollars, and cover certain loans, mortgages, and savings accounts.

Yesterday the Bank of Bermuda said it had acted to generate "increased business activity''. And it also wanted to bring rates in line with United States' levels.

The bank's Prime Commercial Loans have been lowered by half a percent.

Senior vice president and general manager of corporate banking Mr. James H. P.

Masters explained the thinking behind the decision.

"The decline in our lending rates for prime commercial customers is based on the continued sluggishness in the local economy which is coming out of recession and in recognition of the need to lower financing costs to help spark increased business activity on the Island.'' Short term deposit interest rates have been shorn by up to one percent.

This will bring them into line with United States' rates, said Mr. Masters.

"As well, we believe this will encourage our depositors to fix their deposits for a longer period of time to gain the higher rates of interest which are still available.

"Our mortgage rates have not been adjusted at this time in view of the continued strong demand for mortgages at current rates.

"As well, we are awaiting further clarification of the Government's plans for changes in exchange and interest rate controls.'' Bank of Bermuda customers will receive details on rate changes for all accounts. Information will also be posted at branches.

In addition, branch managers will be on hand to provide details.

For its part, the Bank of Butterfield is cutting rates for all savings accounts.

Executive vice president of treasury and capital markets Mr. R. Malcolm Brown said the local economy only showed signs of "moderate growth in the near term''.

And he hoped the rates' reductions would stimulate growth.

"The Bank has decided to reduce various interest rates for certain Bermuda dollar loans and mortgages.'' Rates for Call and Fixed deposits are also being cut by an average of half a percent.

This would "better reflect the current market conditions''.

Also going down are rates for deposits placed for three years or less with Butterfield Mortgage & Finance, the bank's licensed deposit taking subsidiary.

Anyone needing information about the changes should contact the bank's customer dealers in the treasury and capital markets department (295-1187 or 295-4880).

Information on Butterfield Mortgage & Finance's longer term deposits is available from the customer service officers in that company (299-3941).