Associated Banc-Corp and BMO Harris Bank were among the financial institutions increasing their U.S. prime lending rate from 4.25 percent to 4.5 percent on Wednesday in response to the Federal Reserve’s decision to raise its key rate.
Green Bay-based Associated Bank and Chicago-based BMO Harris Bank each have a significant presence in the Milwaukee market.
The prime rate is the baseline rate charged to banks’ most creditworthy customers, namely corporations, and influences the rates available for mortgage, small business and personal loans. Banks’ prime rates are generally correlated with the federal funds rate.
For the fifth time since the financial crisis, the Federal Open Market Committee increased the federal funds rate by a quarter point, this time to 1.25 to 1.5 percent.
The Fed cited a stronger labor market, steadily increasing economic activity, a declining unemployment rate, increasing household and business fixed investment spending as reasons for the rate bump.
“Consistent with its statutory mandate, the committee seeks to foster maximum employment and price stability,” the FOMC said in its statement. “Hurricane-related disruptions and rebuilding have affected economic activity, employment and inflation in recent months, but have not materially altered the outlook for the national economy. Consequently, the committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong.”