Which of the following is the one key interest rate to focus on when trying to forecast interest rate trends in the future?
A)Prime rate
B)Federal funds rate
C)Discount rate
D)Mortgage rate

Question

Quizplus · Accepted Answer

The Federal funds rate is the key interest rate that directly affects short-term interest rates, which, in turn, affect long-term interest rates such as mortgage rates. It is set by the Federal Reserve and is used as a benchmark for other interest rates. The prime rate is based on the Federal funds rate and is typically used for setting consumer loan rates. The discount rate is the rate at which commercial banks can borrow from the Federal Reserve, but it is not directly tied to consumer lending rates.

Which of the Following Is the One Key Interest Rate