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Isle banks increase prime rate
The move follows a boost by the Fed
From staff and wire reportsHawaii's top banks followed their mainland counterparts in raising their prime lending rates a quarter point to 8.75 percent today.
The increases came after yesterday's widely expected move by the Federal Reserve to boost its federal funds rate -- the interest that banks charge each other -- a quarter point to 5.75 percent from 5.50. It was the Fed's fourth quarter-point raise since late June as the central bank tries to stop the sizzling U.S. economy from overheating and causing inflation.
The Fed also raised its largely symbolic discount rate -- which it charges to make direct loans to banks -- a quarter point to 5.25 percent from 5 percent.
Banks around the country immediately announced they were raising their prime lending rates, charged to their best customers, from 8.5 percent to 8.75 percent, the highest level for this benchmark consumer and business rate since late 1995. In the islands, Bank of Hawaii, First Hawaiian Bank, American Savings Bank were the first to announce the move and other local banks were expected to follow immediately.
In other central bank news, Fed Chairman Alan Greenspan won Senate confirmation today for a fourth term as the nation's top banker. The Senate voted 89-4 to approve the nomination of Greenspan, 73, for a four-year term that will run into 2004.
