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Prime Rate

also known as the Fed, National, U.S. and WSJ Prime Rate

Monday, March 27, 2006

Decision on Interest Rates Will Be Released Tomorrow; Quarter Point Hike Fully Expected

The Federal Open Market Committee (FOMC) was in session today, but a decision on interest rates won't be released until tomorrow afternoon. The current FOMC session was recently expanded so as to give Fed Chairman Ben Bernanke a little extra time to settle-in as the new FOMC boss. Of course, as you know from recent entries to this blog, a quarter point increase to the key Federal Funds Target Rate is fully expected after the FOMC adjourns tomorrow, which would translate to a 0.25 percentage point increase to the U.S. prime rate (WSJ Prime Rate.)

It's a pretty safe bet that the national Prime Rate will go from the current 7.5% to 7.75% tomorrow.

If you have any loans that are tied to the Prime Rate (i.e. loans with a variable rate), then you may need to make some minor adjustments to your household budget after tomorrow's expected rate hike, as the annual percentage rate (APR) on your variable rate loans and variable rate credit cards will probably rise by 25 basis points (0.25 percentage points) once the ripple effect of tomorrow's national Prime Rate increase has made its way through the nation's banking system.

New Kids Page Created at The Federal Reserve Website

While you're waiting for tomorrow's FOMC decision, check out the new kids page that's been created at the official Federal Reserve website @ http://www.federalreserve.gov/kids/default.htm. Covers just about anything a curious kid might want to know about The Fed, and even includes a cute little quiz (did I just use the word "cute" to describe a page on the Fed Reserve website?)

Here a snippet from today's press release:

"The Federal Reserve Board on Monday launched a new kids web page designed to educate middle school students about the Board of Governors of the Federal Reserve System. The new web page is designed in a user-friendly, question-and-answer format to ensure easy navigation and the ability to learn basic information about the Fed.

The new web page (www.federalreserve.gov/kids/) features information about the history, structure, and primary functions of the Federal Reserve; the Chairman of the Board of Governors; and the structure of Federal Open Market Committee. Other highlights include a kids quiz and links to other valuable resources on the Federal Reserve Board's web site.

'The Federal Reserve has a long history of promoting economic education and financial literacy. This new web page provides younger students with a basic approach to the complexities of the Federal Reserve that is both enjoyable and interesting,' said Federal Reserve Board Governor Mark Olson."

Stay tuned for tomorrow's blog entry.



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