In response to the Federal Reserve’s decision Wednesday to raise the target federal funds rate by a half-point, banks in Connecticut and nationwide are increasing interest rates.
Numerous banks, including Stamford-based Webster Financial Corp., Citizens Financial Group and KeyCorp, have announced plans to increase their prime lending rate — the interest rate commercial banks charge their most creditworthy customers.
Webster Financial, parent to Webster Bank, and Citizens Financial, parent to Citizens Bank, and KeyBank parent KeyCorp raised their prime lending rates to 4%. Other major banks, including JPMorgan Chase & Co., Citibank and Wells Fargo have done the same, according to Reuters.
The Fed’s decision to raise interest rates caught few by surprise as the central bank tries to fight rampant inflation, which hit a 40-year high in March, with consumer prices increasing 8.5%.
The fed funds rate is the interest rate at which banks lend short-term money to each other. An increase in the fed funds rate typically leads to higher interest rates on commercial and retail borrowers.
