Banks Raise Prime Rate as Fed Hikes Interest Rates Again

Major U.S. banks have raised their prime lending rate following the Federal Reserve's decision to hike its benchmark interest rate. The move will increase borrowing costs for consumers and businesses with loans.

The prime rate of JPMorgan, Bank of America, Citigroup, Wells Fargo, KeyCorp, Huntington Bancshares, Fifth Third Bancorp, and Truist Financial will rise to 7% from 6.75%. This change takes effect on Thursday.

The Federal Reserve raised rates by a quarter of a percentage point on Wednesday, signaling further increases in borrowing costs in the coming months to address persistent inflation.

Shares of big banks ended lower amid broader weakness in U.S. stocks, with BofA closing down 2.7%, Citi 2.4%, Wells Fargo 3%, and JPMorgan 1%. Morgan Stanley slipped 1.9% and Goldman Sachs fell 4%.