When Fed had rates at 1%...

Discussion in 'Economics' started by let it run, Jan 16, 2006.

  1. ... and you walked into your friendly local bank, what were you guys getting in terms of deposit/loan rates from your high street banks?

    Also, out of curiosity, how much tighter are the spreads that banks get now that rates are at a more historically realistic level?

    Having lived in the UK all my life, I've never seen the realities of such a low base rate. I suppose what I am getting at is how cheap are banks prepared to let money go at and whether there is a difference in the money they make from the spread when the target rate is at high/low levels.

    Any info and opinions appreciated.
  2. Loans were based on the 'prime' rate... and I think I remember my old professor getting something like prime minus 1% or something like that... Was sort of ridiculous looking back.
  3. I was getting 25 basis points on my checking account balance at that time. 1% is as low as the Fed can go, otherwise money market funds won't be able to pay anything out to depositors after paying their own expenses.