Prime Rate

Officially, this is the interest rate that banks charge their biggest and best customers for short-term loans. (In reality, some borrowers are charged less or more, depending on various factors.) Because some other rates in the economy are based on the prime, and because it is considered a good indicator of the direction of rates generally, the prime rate (which is set by individual banks) is closely watched. Banks do not seem to change this rate lightly, and the way is often led by a regional bank rather than one of the big coastal money center institutions.



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