The prime rate is published by the”Wall Street Journal,” considered the official business newspaper of the USA. The speed itself is dependent on polling what the nation’s 10 largest banks charge in interest for short-term loans. After seven of the 10 banks polled change their short-term rate of interest, then the prime rate varies. Since Dec. 1, 1947, the prime rate has been part of this financial landscape and has fluctuated with good times and bad times in the USA.
The Inaugural Rate
According to the”Wall Street Journal,” the first prime speed recorded was 1.75% on Dec. 1, 1947. At the moment, the WSJ polled the country’s 30 major banks for their short-term interest rates and then changed the prime speed when 23 of them changed their prices. Financially, the article World War II US economy was secure and the prime rate rose gradually, generally by no more than half a percentage point at one time. It reached a then-high of 8.5 percent on June 9, 1969, and then began a slow drop until 1971.
Dual Digits
It took 22 years to get the prime rate to reach 8.5 per cent for the very first time. It took only four years–from 1969 to 1973–to allow this to happen again, as the prime rate hit 8.5 percent on July 18, 1973. But this time, rather than heading down, the prime rate kept rising, a product of this volatile US economy of the 1970s, that comprised a gasoline crisis. The prime rate hit 10 per cent for the first time on Sept. 18, 1973, 27 years after the speed was first indexed by WSJ. After dipping below 10 per cent for a brief time in 1974, the speed went back about 10% on April 11, 1974, and remained above 10 percent for almost a year, attaining a then-high of 12 percent on July 8, 1974.
Twenty Percent
The prime rate ballooned from 1978 to 1985, remaining above 10 percent and scaling heights that the speed had never eclipsed before. The speed hit 10 percent on Oct. 13, 1978, and it rose steadily until it reached 20 per cent for the first time on Dec. 10, 1980. Just nine days later, the prime rate reached its all-time large in 21.5 percent on Dec. 19, 1980. The rate stayed above 20 percent until it dipped to 19.5% on Feb. 3, 1981. The prime rate reached 20 per cent for just one other period, from May 19, 1981 to July 8, 1981.
Back to Single Digits
The prime rate needed four more years to recover to its pre-1970 levels. On July 18, 1985, the prime rate dropped out of double digits and down to 9.5 percent. The speed slipped back to double digits for the last time on Aug. 11, 1988, and stayed there until it slipped straight back to 9.5 percent on Jan. 2, 1991.
Pre-1960s Levels
During the economic boom of the 1990s and early 2000s, the prime rate dipped to levels the nation hadn’t seen since the 1950s. On June 22, 2003, the prime rate increased to 4% for the first time since Sept. 11, 1958. On Dec. 6, 2008, the prime rate dipped to 3.25 per cent, despite the country’s economic recession. This has been the lowest prime rate since Aug. 4, 1955.
Totals and Averages
The”Wall Street Journal” keeps totals and averages to the prime rate, and notes that the average prime rate is 9.842 percent and that the median prime rate is 8.75 percent. Also, the prime speed’s most frequent valuation is 7.5 percent.