Definition
The base interest rate many banks use to price loans like credit cards and home equity lines of credit.
The story
By long-standing convention, major US banks set the prime rate 3 percentage points above the top of the Fed's target range. After the Fed raised its range to 3.75% to 4.00% in September 2026, major banks announced a move to 7% the same day, effective the next day.
Why markets watch it
It's the link that carries Fed decisions to many variable-rate consumer loans.
See it in the story
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms