following the US Federal Reserve in upping interest rates by 0.25 percent.

The Royal Gazette reported yesterday that on the tail of the Fed's increase the Bank of Butterfield increased its interest rates on Friday for Strata savings and passbook accounts by a quarter of a percent.

Borrowers with variable residential mortgage rates and variable personal loan rates with the Bank of Butterfield will also be hit by the quarter percent interest rate rise.

But those with fixed interest rate loans will not suffer any hikes.

Bermuda Commercial Bank corporate treasury general manager Barry Munholland said it would be increasing the interest rates for savers, just as the Bank of Butterfield did, to help savers get more for their money.

But the BCB was not hiking any lending rates at all so its borrowers could breathe easy.

"The Federal Reserve raised rates in the US on Thursday of last week and as a result interest rates in the marketplace have increased and we're passing those rates on to our clients,'' he explained.

But most of the other financial institutions on the Island are not going down the same road just yet.

A spokesman at the Bank of Bermuda ruled out the move for the immediate future.

Retail clients executive vice president Alan Richardson said: "At this time, we do not believe that market conditions warrant an increase in the Bermuda base rate.'' "The Bank plays a key role in encouraging economic growth on the Island and increasing the base rate at this time would have a negative impact on our loan customers.

"While future changes in market conditions may be reflected in our base lending rate, we will continue to be sensitive to local market conditions and developments in key Bermuda industries.'' Bermuda Savings & Loan deposit company will also not be increasing its rates.

Managing director Mrs. Betty Brown pointed out that the Bermuda Savings & Loan maintained its savings interest rates when the Fed cut their rates recently and some institutions in Bermuda followed suit.

This meant those companies were now moving their rates back into line with the rates the Bermuda Savings & Loan had kept all along.

She said some savers with her deposit company had been given three months' notice of forthcoming interest rate reductions on September 1, but these were subject to change.

Gibbons Financial Services vice president of marketing Andrew Vaucrosson said their interest rates were reviewed weekly.

Their policy was to anticipate the marketplace in a proactive manner rather than responding after Federal Reserve changes in a reactive way, as the Bank of Butterfield had done.

And he said Gibbons' rates were already "pretty high'' and suggested the Bank of Butterfield probably had more US dollar exposure than Gibbons, giving it more reason for the rise.