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Prime Rate

The interest rate that commercial banks charge their most creditworthy customers, usually large corporations. It's also called the prime lending rate or "prime". The prime rate is the best rate that customers can obtain. It's the rate at which banks loan funds to preferred customers for mortgages, loans, and credit cards.
The prime rate is largely determined by the federal funds rate, which is set by the Federal Open Market Committee (FOMC). The prime rate is usually about 3% higher than the federal funds rate. The prime rate is often a reflection of broader trends in the economy.

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