United States Prime Rate Rises to 3.75%

The Federal Open Market Committee (FOMC) of the Federal Reserve has just adjourned its eighth and final monetary policy meeting of 2016 and, in accordance with our latest forecast, has voted to raise the benchmark target range for the federal funds rate from 0% - 0.25% to 0.5% - 0.75%.  Therefore, the United States Prime Rate (a.k.a the Fed or national Prime Rate) is 3.75%, effective tomorrow.

======

American banks have already started to announce that their Prime Lending Rate is now 3.75%, including:

• Bank of America® (effective today; Press Release )
• Citi® (press release) 
• The Bank of New York Mellon® Corporation (press release)
• Wells Fargo® (press release) 
• JPMorgan Chase®
• U.S. Bank® (press release) 
• PNC® (press release) 
• Comerica Bank® (press release)
• Dollar Bank® (effective today; press release) 
• SunTrust Bank® (press release)
• Huntington Bancshares®  (press release)
• Webster Financial Corporation® (press release)  
• Northern Trust® (press release)  
• Citizens Financial Group® (press release)
• TCF Financial Corporation® (press release)
• HSBC Bank® USA (press release)
• Santander® Bank (press release)
• Fifth Third Bancorp® (effective today; press release)
• BMO Harris® Bank (press release)
• M + T Bank® (press release)  
• BB + T® (effective today; press release) 

============

Here's a clip from today's FOMC press release (note text in bold):

"...Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year. Job gains have been solid in recent months and the unemployment rate has declined. Household spending has been rising moderately but business fixed investment has remained soft. Inflation has increased since earlier this year but is still below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation have moved up considerably but still are low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further. Inflation is expected to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1/2 to 3/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Esther L. George; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo..."

==========

ECONOMIC PROJECTIONS

==========

--> www.FedPrimeRate.com Privacy Policy <-- >  SITEMAP  <