US banks raise prime lending rate to 7% after Fed decision

Major US banks raised their prime lending rate to 7% on Wednesday, following the Federal Reserve's decision to increase its benchmark interest rate by 25 basis points.

This marks the Fed's first rate hike since 2023, moving the prime rate from 6.75% to 7%, which will increase borrowing costs for individuals and businesses across the United States.

Analysts noted that higher interest rates boost US banks' profits by widening net interest income—the difference between what banks earn on loans and what they pay on deposits.

The Federal Reserve indicated that borrowing costs may continue to rise in the coming months as part of efforts to control inflation.