Three Banks to Lower Prime Lending Rate to 8% After Fed’s Rate Cut
Three banks will lower their prime lending rate after the Federal Reserve decided to reduce the federal funds rate.
BMO, Truist Financial and MT&T Bank said in separate press releases issued Wednesday (Sept. 18) that they will lower their prime lending rate from 8.5% to 8%, effective Thursday (Sept. 19).
The Fed announced Wednesday that it decided to lower the target range for the federal funds rate by one-half percentage point to 4.75% to 5%, attributing the move to progress on inflation and the balance of risks.
“The committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run,” the Fed said in a Federal Open Market Committee (FOMC) statement announcing the decision. “The committee has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the committee is attentive to the risks to both sides of its dual mandate.”
The Fed said in the statement that job gains have slowed, the unemployment rate has risen but remains low, and inflation remains somewhat elevated but has moved closer to the committee’s goal of 2%.
Eleven members of the FOMC voted for the monetary policy action, according to the statement. The 12th member, Michelle W. Bowman, voted against it, preferring to lower the target range for the federal funds rate by one-quarter percentage point.
The Fed’s rate cut, the first since the pandemic, was larger than usual and is expected to mark the beginning of a steady easing of monetary policy, Reuters reported Wednesday.
Investors had expected a traditional one-quarter percentage point rate cut from the Fed a week ago but began expecting a larger cut in recent days, The Wall Street Journal reported Wednesday.
America’s Credit Unions Deputy Chief Economist Curt Long said Wednesday that the cut was larger than the FOMC had previously forecast and that its forecast indicates another 50 basis points of rate cuts this calendar year and a full percentage point reduction in 2025.
“The FOMC cut rates more aggressively than it had previously forecast, an acknowledgment that inflation is subsiding and risks to the labor market are rising,” Long said in a statement emailed to PYMNTS.
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