MoneyCafe.com

We have completed our bank survey.  The Prime Rate was lowered today from 4.00% to 3.25%.

We anticipate the Prime Rate will be lowered by banks today to 3.25% and will update our Prime Rate Page upon completion of our comprehensive bank survey.

Wells Fargo has already announced the reduction in their rate to 3.25%.  JPMorgan Chase and Bank of America have also announced the same reduction. Wachovia has followed.

The Federal Funds Target Rate was reduced today to 0.25% or Lower.  They now have a target range of 0.00% to 0.25%.  See http://www.federalreserve.gov/newsevents/press/monetary/20081216b.htm. 

This is a historical low for the Federal Funds Target Rate.  The Fed Funds Target Rate is a short-term rate objective of the Federal Reserve Board.  The actual Fed Funds Rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.  The real rate changes daily but is usually close to the target rate desired by the Federal Reserve.  Lately the actual rate has been considerably lower.  For example, last month the target rate was 1.00%, but actual rate averaged .39%.  Yesterday, the target rate was 1.00%, but the actual rate was .11%.  You can find the actual rate at http://www.moneycafe.com/markets/interestrates.htm?qm_target_page=Rates.  The symbol is !FFUNDS.

We now anticipate the Prime Rate will be lowered by banks today to 3.25% and will update upon completion of our bank survey.

The Federal Reserve is considering today whether to reduce the Federal Funds Target Rate and will announce the decision at 2:15 p.m. Eastern.  The consensus seems to be they will drop the rate .50% to an all time low of .50%.  If this happens, we anticpate the Prime Rate will also drop by .50% and we will take a bank survey this afternoon to confirm.

Check back later for an update.