Based on a 2003 policy, the primary credit lending rate is set
A) lower than the federal funds rate.
B) lower than the prevailing Treasury bill rate.
C) lower than the expected inflation rate.
D) above the federal funds rate.

Question

Quizplus · Accepted Answer

Based on a 2003 policy, the primary credit lending rate is set above the federal funds rate. The primary credit lending rate is the interest rate that the Federal Reserve System charges banks for short-term loans to meet their reserve requirements. The Federal Reserve sets this rate above the federal funds rate to discourage banks from relying too heavily on borrowing from the Federal Reserve and encourage them to borrow from other banks instead.

Based on a 2003 Policy, the Primary Credit Lending Rate