U.S. prime rate

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The U.S. prime rate is in principle the interest rate at which a supermajority (3/4ths) of American banking institutions grant loans to their most creditworthy corporate clients.^[1] As such, it serves as the de facto floor for private-sector lending, and is the baseline from which common "consumer" interest rates are set (e.g. credit card rates). Traditionally, the rate is set to approximately 300 basis points (or 3 percentage points) over the federal funds rate. The Federal Open Market Committee (FOMC) meets eight times per year wherein they set a target for the federal funds rate.

In the United States, the prime rate is traditionally established by the Wall Street Journal.^[2] Every major bank sets its own prime rate. When 23 out of the 30 largest US banks change their prime rate, the Journal publishes a new prime rate.