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Prime Interest Rate To Remain Low For Months

Posted by: RateAPY Bank Rates News
February 24th, 2010

Federal Reserve Chairman, Ben Bernanke, gave his semiannual monetary policy testimony today before the House Financial Services Committee. Last week the Federal Reserve raised the discount interest rate banks pay for emergency loans. Today, Chairman Bernanke reiterated that interest rates should remain low for several more months because economic recovery from the worst recession in generations is expected to be slow.

Fed to Keep Prime Rate Low

Although the Fed raised the discount interest rate, they have not yet raised the Fed Funds interest rate. The Fed Funds interest rate is the rate banks charge each other for overnight loans. Prime Rate usually tracks the Fed Funds interest rate plus 3%. As long as the Feds leave the Fed Funds rate alone, the Prime Rate will stay low. According to Bernanke today, that should be for several more months.

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