The Federal Reserve continued to push the envelope on interest rates, as it seeks to put a lid on persistent inflation. And already there has been local reaction.

Wednesday the Fed raised the key federal funds rate to a 16-year high of more than 5 per cent. The central bank boosted its benchmark rate by a quarter point to 5.1 per cent.

After market close, the Bank of N.T. Butterfield & Son Limited said that in response, it is adjusting its base interest rates on loans and mortgages, also by a quarter of a percentage point.

The bank said the change in base rates applies to Bermuda dollar residential mortgages, consumer loans, corporate loans and USD loans.

The rate increase on loans takes effect May 9. The rate increase for existing Bermuda residential mortgages is effective 90 days later.

Back overseas, rates on credit cards, mortgages and auto loans, which have been surging since the Fed began raising rates last year, stand to rise even more. The result will be more burdensome loan costs for consumers and businesses.

The hike of 25 basis points in the target range of the US Federal Funds Rate was the tenth since March 2022.

Meanwhile, amid the volatility in banking circles, an unintended consequence of the Fed’s activities, there may be some indication of slowing in future consideration of any further rate action.

The Fed statement said it will now weigh a range of factors in “determining the extent” to which future hikes might be needed.

According to the Associated Press: “Speaking at a news conference, chair Jerome Powell said the Fed has yet to decide whether to suspend its rate hikes. But he pointed to the change in the statement's language as confirming at least that possibility.”

Previous statements had said “some additional" rate hikes might be needed. But the Wednesday statement seemed to deliberately omit similar language.