Wall Street banks raise prime rates to match Fed hike

The Federal Reserve Building is seen ahead of the Federal Reserve Board signaling its intention to raise interest rates in March as it focuses on tackling inflation in Washington, States United States, January 26, 2022. REUTERS / Joshua Roberts / File Photo

June 15 (Reuters) – U.S. banks JPMorgan Chase & Co (JPM.N), Citigroup Inc (CN) and Wells Fargo & Co (WFC.N) said on Wednesday they had raised their prime rates by 75 basis points to 4, 75%, as of Thursday, matching the Federal Reserve’s rate hike earlier in the day.

The Fed raised its target interest rate by three-quarters of a percentage point, the highest by the U.S. central bank since 1994, as it seeks to rein in runaway inflation. Read more

The central bank faces the task of charting a course for the economy to weather rate hikes without repeating the predicament of the 1970s when central bank interest hikes aimed at fighting inflation led to a strong recession.

Inflation, which has become a hot political issue, worsened with the war in Ukraine, hitting market sentiment and adding pressure to an already struggling supply chain.

However, since banks make money on the difference between what they earn on loans and payments on deposits and other funds, they generally thrive in a high interest rate environment.

Reporting by Manya Saini in Bangalore; Editing by Vinay Dwivedi

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