No, it isn’t. The Prime Rate was initially established as the interest rate banks set for the most credit worthy clients to lend at, hence it is the “Prime” rate. It no longer carries that connotation; loans are often pried below or above prime for the lowest risk clients. Each bank in accord with other rates arbitrarily sets the Prime Rate. Some banks set their Prime Rate 300 basis points above the Federal Funds Rate. Some base it on the market with other interest rates such as the LIBOR rate. Some banks update on the day of a change in the Fed Funds rate. Others wait a few days or longer. The rate is often adjusted very closely between large banks, soon after rates change it is common to see all large banks offering the same prime rate. So, the Prime Rate isn’t one thing for all institutions, but it does not differ much from one to another.

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