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JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co said on
Wednesday the new rates, including the latest 75 basis point
hike, would take effect on Thursday.
The U.S. central bank has remained steadfast in its decision to
keep raising rates until data shows a sustained pullback in
consumer prices.
On Wednesday, Fed Chair Jerome Powell said U.S. central bank
policymakers are "strongly resolved" to bring down inflation
from the highest levels in four decades and "will keep at it
until the job is done," a process he repeated would not come
without pain.
Central bankers are now expecting rates to rise to 4.6% by the
end of next year, according to the median estimate of all 19 Fed
policymakers.
A hike in interest rates typically boosts a bank's profit, since
it can earn more net interest income - a metric that gauges the
difference between the money banks earn on loans and pay out on
deposits.
However, higher interest rates can shackle the economy and
squeeze consumer demand for loans, which can ultimately hurt
lenders.
"Higher interest rates are going to lead to a slowdown in both
consumer borrowing as well as corporate borrowing," said Lance
Roberts, chief investment strategist and economist at RIA
Advisors.
"This is going to impact economic growth to a great degree as we
move further into 2023," he added.
Expectations of how aggressively the Federal Reserve will raise
rates in its fight against inflation hit a fresh high of 4.64%
from 4.45% last week, Refinitiv data showed.
The higher terminal rate is expected to push up the banks'
lending rates even further.
(Reporting by Niket Nishant and Mehnaz Yasmin in Bengaluru;
Editing by Shinjini Ganguli, Shailesh Kuber and Anil D'Silva)
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