A flexible prime interest rate benefits banks by helping to protect their interest margins; it benefits borrowers because more credit is readily available.

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A flexible prime interest rate allows banks to adjust the rate they charge on loans based on changes in the market or the policy rate set by the central bank. This flexibility helps banks protect their interest margins by adjusting rates as their own borrowing costs change. For borrowers, when interest rates are adjusted downward in response to market conditions, credit becomes cheaper and more accessible, encouraging borrowing and investment.

A Flexible Prime Interest Rate Benefits Banks by Helping to Protect