THE FEDERAL FUNDS RATE is the interest rate targeted by the Federal Reserve. It is the interest rate banks charge each other for overnight loans. After the recent cut on Oct. 30, 2019, the third cut this year, the rate will hover between 1.5 percent and 1.75 percent. The federal funds rate is not the rate used by banks for lending to individuals and businesses; that is the prime interest rate, currently at 4.75 percent. Since 1994 banks commonly calculate the prime interest rate as the federal funds rate plus 3 percent (in this case 1.75 percent plus 3 percent). Every U.S. bank sets its own prime rate; however, most utilize the same one.
The Federal Reserve changes the interest rate based on its feeling about the direction in which the economy is moving. The Federal Open Market Committee convenes about every six weeks and may also hold emergency meetings if monetary policy merits discussion between scheduled meetings. When economic data show the economy doing well, the Federal Reserve looks to keep the interest rate the same or perhaps raise it; the opposite occurs when the economy shows signs of weakness.
While lenders usually use the prime rate to calculate many loan interest rates, it is not mandatory for them to use this rate, nor is it a law. For instance, a mortgage interest rate is frequently lower than the prime rate because the mortgage is secured with real estate as collateral, which limits the bank’s downside if the loan goes bad. The customer’s credit history also plays a role in the bank’s interest rate decision.
The all-time high for the prime interest rate was 21.5 percent in 1980. Since 2017 the prime interest rate has hovered between 4 percent and 5.5 percent. The recent rate cuts signify the FOMC has concerns about the economy, as it has reduced the prime interest rate by 0.75 percent this year. Not every existing loan is affected by rate cuts, however. For example, for a loan with a balance of $500,000 with a variable interest rate based on the prime rate, it would cost $3,750 less per annum in interest charges due to the 0.75 percent lower interest rate. If someone has a fixed interest rate loan, the amount of interest would not change because the interest rate does not vary and would not be impacted by any rate cuts.
While it may seem like a good thing to have lower interest rates, it may signal a slowing economy and may negatively impact the value of investments, such as retirement plans or stock holdings.
Imagine waking up to the smell of freshly brewed coffee, a light breeze dancing on your face, and views so beautiful you begin to think it is a simulation. The United Kingdom is teeming with unique accommodations that will please your eyes. Check out these stays with stunning views on your next U.K. adventure.
AdventureWomen, the travel company specializing in adventure tours for women, announced a partnership with African Wildlife Foundation. The organization supports the conservation of Africa’s wildlife through education, community development and sustainability projects. As part of the partnership, the two organizations will host a women’s safari to Zimbabwe in May 2022.
Carillon Miami Wellness Resort, where innovative wellness and balanced indulgence come together in one extraordinary beachfront setting, recently partnered with First Responders Children’s Foundation, a non-profit organization providing financial support to children and families of first responders. This partnership formed the Carillon Cares: Summer of Heroes offers, including a donation to the foundation for each stay booked, which supports giving back to those who fought on the front lines during the pandemic.
The Sports Industry Awards returned with a bang last night as 200 guests packed the W Hotel Great Ball Room for the gala ceremony.
Although much changed in the past year, Cancún still has the joie de vivre we need right now after months of cabin fever — even with safety measures in place. In fact, the first half of 2021 may be a good time to rediscover Mexico’s home-grown Caribbean resort town in a slower, more relaxed mode that contrasts its rollicking “spring break” reputation of old. One place to take in Cancún at its best is JW Marriott Cancun Resort & Spa, a mile up from the convergence of night clubs, chain restaurants, souvenir emporiums and shopping malls along Avenida Kukulkan.
June marks Pride Month, largely credited to bisexual activist Brenda Howard who organized Gay Pride Week and the Christopher Street Liberation Day Parade in 1970, one year after the Stonewall Riots. The parade eventually become the New York City Pride March, leading to Pride Month and similar parades and marches around the world.
The biggest names in the Middle East sporting community will gather for the Sports Industry Awards as the event returns for its eighth edition. SPIA recognizes the achievements of individuals, organizations, facilities and campaigns that contributed to the development of sport in the region.
Haven Riviera Cancun Resort & Spa, an all-suite, adults-only, all-inclusive oceanfront resort, announces a new experience suited for epicurean travelers: The Chef’s Table. At Haven’s fine-dining restaurant Olios Mediterranean, The Chef’s Table offers the best seats in the house, right in front of the chef’s working station and open, top-of-the-line kitchen. And the actual table is beautiful in its own right: made from reclaimed wood and complemented by a turquoise glass chandelier.