Banks Follow Fed By Hiking PrimeRates
WALL STREET - (08/12/04) -- Moments after the Federal Reserveannounced a 25 basis point rise in its Fed Funds target rateTuesday banks across the country began hiking their own benchmark,the Prime rate that they charge their best business customers. Fromthe east coast to the west coast, major banks like Wachovia, Bankof America, Wells Fargo, Suntrust and KeyBank announced their own25 bps hike in their Prime rates to 4.50%. For credit unions, thatwill most likely mean a rise in home equity rates, which are mostclosely tied to Prime, according to Bill Hampel, chief economistfor CUNA. But it is also expected to push up rates on memberbusiness loans, also tied to Prime. The Prime rate fell to 4% lastyear, its lowest since 1958, before rising to 4.25% June 30, theday the Fed boosted the target rate for Fed Funds to1.25%.