What Is the Government Prime Interest Rate?

• Current Rate

  The prime rate as of June 17, 2009, is 3.25 percent. It has not changed since Dec. 16, 2008.

• Misconceptions

  The Federal Reserve Board does not directly change the prime interest rate. Rather, the board changes the federal funds rate (the rate at which banks lend money to one another), which usually affects the prime rate, but does not determine it.

• Determination

  Although each individual bank sets its own prime rate, what is usually referred to as "the prime rate" is compiled by the Wall Street Journal, which surveys the 30 largest banks and changes the rate when 23 of those banks do so.

• Historical Highs and Lows

  According to the Federal Reserve, the prime rate has been as high as 20.39 percent in July 1981. Current rates approach the all-time low of 2 percent last seen in August 1950.

References & Resources

• Federal Reserve Statistical Relaase -- Monthly Prime Rates
• The Federal Reserve System -- Purposes and Functions
• Prime Rate -- Rate, Definition and Historical Graph (data from Federal Reserve)