Follow The Fed's Steps, Big US Banks Raise Loan Interests

NEW YORK - United States (US) banking circles on Wednesday, March 16, began raising their basic lending rates by a quarter of a percentage point each, just moments after the US Federal Reserves (The Fed) ensured an increase in interest rates by a portion the same one.

The Fed's move to raise interest rates was carried out again after the last time it was carried out in 2018, in order to contain the very high inflation rate in Uncle Sam's country.

Citigroup Inc, Wells Fargo & Co, JPMorgan Chase & Co and Bank of America Corp announced an increase in their base interest rates, each to 3.5 percent from 3.25 percent, and effective Thursday, March 17, local time. .

Previously, as reported by Antara, Wednesday, March 16, the Fed signaled it would begin aggressively weaning the economy from pandemic-era measures to curb decades of high inflation.

The central bank raised its benchmark interest rate by 25 basis points, to counter economic risks posed by excessive inflation and the war in Ukraine. Policymakers signaled they would push the key federal funds rate to a range of 1.75 percent to 2.00 percent by the end of 2022.

Banks, which make money on the difference between what they get on loans and paying off deposits and other funds, typically thrive in a high interest rate environment.

In after-market trading, shares of major US banks rose between 3.3 percent and 6.6 percent each.

The Fed faces the task of charting the direction of the economy to deal with rising interest rates without repeating the 1970s-style predicament in which a central bank rate hike to fight inflation led to a steep recession.

Inflation, which tripled from the Fed's 2.0 percent target and is a hot political issue, has been exacerbated by the war in Europe that has caused a spike in commodity prices and piled pressure on already damaged supply chains.