Prime lending rate cut by Bank of America
Oct 30, 2008 | Comments 1
The Bank of America Corp was the first to lower its prime lending rate on Wednesday from 4.5 percent down to 4 percent.
The cut in the Bank of America prime rate follows the half a percent cut by the Federal Reserve Board yesterday who announced they were cutting the Official interest rate to boost growth in the deteriorating economy.
The prime lending rate normally moves in line with the fed funds rate which is now at 1 percent after yesterday’s cut.
The borrowers most likely to benefit from the prime rate cut would be those with consumer loans such as home equity loans and car loans and the fed rate cut may improve the rate you pay on your credit cards.
Source: forbes
Post news, advice and problems with finance and business. Post your thoughts using this form.
Filed Under: Business News • Mortgage News
And, it looks like another 50 basis points is coming on December 16:
http://www.wsjprimerate.us/wsjprimerate/2008/10/futures-market-100-certain-fed-will-cut_31.html
Major U.S. banks may rebel by not lowering their Prime Rate — or by lowering their Prime by 0.25 percentage point if the Fed cuts by 50 — if the Fed lowers the fed funds target below 1.00%. If they do, they’ll probably say they can’t afford the cut; would hurt profits too much. This happened in Canada back in August when the Bank of Canada cut by 50 basis points, and Canadian banks responded with a 25 basis point cut to their Prime Rate.
It’ll be fun to watch what happens when the next FOMC meeting is adjourned.