The Fed's grip is tightest on the
A)prime rate
B)federal funds rate
C)mortgage rate
D)credit card rate
E)student loan rate

Question

Quizplus · Accepted Answer

The Federal Reserve, also known as the Fed, has the most direct control over the federal funds rate. This is the interest rate that banks charge one another for overnight loans and serves as a benchmark for other rates such as the prime rate, which is the rate that banks charge their best customers. The Fed influences the federal funds rate through its monetary policy decisions, such as changing the target for the federal funds rate or buying/selling Treasury securities. The Fed has less direct control over other rates such as mortgage rates, credit card rates, and student loan rates, which are influenced by market factors and consumer demand.

The Fed's Grip Is Tightest on the