People enter JPMorgan Chase & Co. New York headquarters in Manhattan, New York City, USA on June 30, 2022. REUTERS/Andrew Kelly

SEPTEMBER 21 (Reuters) – Three major U.S. banks have raised prime lending rates to their highest level since the 2008 global financial crisis after the Federal Reserve raised interest rates sharply. .

JPMorgan Chase (JPM.N), Citigroup and Wells Fargo (WFC.N) said on Wednesday that new rates, including the latest 75 basis point rate hike, will take effect on Thursday.

The US Central Bank is firm in its decision to continue raising interest rates until data show consumer price inflation will continue to fall.

Fed Chairman Jerome Powell said Wednesday that U.S. central bank policymakers are “very determined” to bring inflation down from its 40-year high and “will continue to do so until the job is done.” , the process he repeated is painful. . read more

The central bank now expects rates to rise to 4.6% by the end of next year, according to the median estimate of all 19 policymakers on the Federal Reserve Board.

Rising interest rates usually boost bank profits. This is because banks can increase their net interest income, a metric that measures the difference between money earned on loans and money paid on deposits.

However, higher interest rates could weigh on the economy, weighing on consumer demand for loans and ultimately hurting lenders.

“Rising interest rates will lead to a slowdown in consumer borrowing and corporate borrowing,” said Lance Roberts, chief investment strategist and economist at RIA Advisors.

“This will have a significant impact on economic growth as we move further into 2023,” he added.

Expectations about how aggressive the Fed will raise rates in the fight against inflation reached 4.64% last week, up from 4.45% last week, according to Refinitiv data.read more

Rising terminal rates are expected to further push bank lending rates higher.

Reported by Niket Nishant and Mehnaz Yasmin of Bengaluru. Edited by Shinjini Ganguli, Shailesh Kuber and Anil D’Silva

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