US Federal Reserve hikes interest rates by 0.75%

Federal Reserve Chairman Jerome Powell

(CNS): The US Federal Reserve enacted its second consecutive 0.75% interest rate increase on Wednesday, taking its benchmark rate to a range of 2.25% to 2.5% following a two-day policy meeting. In an effort to tackle soaring inflation, Fed Chair Jerome Powell said the increase was essential and there will be more to come to bring down the cost of living.

Here in Cayman, borrowers can expect to see their loan payments increase in a matter of days as local banks adjust their prime rates in line with US rates.

Interest rates offered by Cayman’s high street banks are already priced well above the federal rate and the increase resulting from this latest change will hit families with mortgages and other major loans hard, given that the cost of living in the Cayman Islands is already far higher than in the United States.

While most families were looking forward to a reduction on their CUC bill this month as the government’s summer subsidy comes into effect, the increase in interest rates could wipe out that anticipated saving and place more families at risk of losing their homes.

The government is also funding the Cayman Islands Development Bank’s cut-rate loans offered to Caymanians to buy a home, land or refinance an existing mortgage. The CIDB has begun lending money as low as 3.75% interest on 30-year loans for those borrowers who qualify for this low rate.

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