Re:U.S. inflation rate rises to 13-year high of 5.4%
by silexia on Wednesday October 13, 2021 @06:08PM
(#28858264)
You are correct on all points. I know the Fed sets the targets and can't always get what they want, but effectively in recent past they have set the general direction of these rates. I was trying to oversimplify.
No.
The Fed sets the target for the Federal Funds Rate (currently, as a range target, used to be a single rate target), which is an interbank lending rate, but don't actually set that actual rate (but it is usually very close to or within the target range.)
Currently, the actual Fed Funds Rate is 0.25%, the target range is 0-0.25.
The prime rate, a measure of available commercial rates, is set by banks lending decisions. It is pretty invariably higher than the Fed Funds Rate; currently, its 3.25%.
> if the fed rate goes to 5%
...it would be an enormous jump from the lowest its ever been to the highest since before the 2009 crisis.