Major U.S. Banks Raise Prime Rates in Unison to 7%

[Financial News] Major U.S. banks, including JPMorgan Chase, Bank of America (BofA), and Citigroup, raised their prime rates in unison after the Federal Reserve System (Fed) increased its benchmark interest rate on the 16th local time, marking the first hike in more than three years.
According to Reuters, the prime rates at JPMorgan Chase, BofA, Citigroup, Wells Fargo, KeyCorp, Huntington Bancshares, Fifth Third Bancorp, and Truist Financial will rise by 0.25 percentage points from 6.75% to 7.00%, effective the 17th.
The move follows the Fed's 0.25-percentage-point rate hike at its Federal Open Market Committee (FOMC) meeting on the 16th. It was the first increase in more than three years since July 2023.
Prime rates at banks that track the Fed's policy rate apply to variable-rate products such as credit cards and personal loans.
The broader tightening environment is also expected to put upward pressure on fixed mortgage rates, increasing overall home-purchase and borrowing costs.
Major bank stocks also weakened.
Normally, a rate hike is positive for banks' net interest margins because lending rates are repriced faster than deposit rates. On this day, however, concerns that monetary tightening will persist had a greater impact.
BofA (-2.7%), Citi (-2.4%), Wells Fargo (-3%), JPMorgan (-1%), Morgan Stanley (-1.9%), and Goldman Sachs (-4%) all declined. 


[email protected] Lee Seok-woo, International Affairs Correspondent Reporter