Banker to Banks

What is the Prime Rate and who sets this Rate?

The Prime Rate is the lowest rate of interest charged by commercial banks on loans to their best customers. The Prime Rate is used as a base from which interest rates on loans to the private sector are determined. Although this rate is set by the commercial banks themselves, a clear linkage to the Central Bank's Discount Rate can be observed, reflecting banks' response to changes in Central Bank monetary measures.

  1. What does it mean when we say that the Central Bank acts as a Clearing House?
  2. What is a Commercial Bank?
  3. How many commercial banks are there in The Bahamas?
  4. What is the Prime Rate and who sets this Rate?
  5. What have been the changes in the Prime Rate over the past few years?
  6. Does the Central Bank set the interest rates, fees and other charges that commercial banks charge their customers?

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