The Federal Reserve establishes the interest rate charged to major corporations on long-term loans,True/False?

Strictly speaking, False, the Federal Reserve does not *directly* set the loan interest rates charged by banks.





However the Federal Reserve has a very strong *indirect* influence on those rates.





The Federal Reserve sets the ';Federal Funds'; rate which is the interest charged for loans between banks. This is usually the cheapest money a bank can borrow.





Banks will use the Federal Funds rate as a benchmark for other loans, and a change in the rate as a signal to raise or lower other loan rates.





So if your question was reworded slightly





';The Federal Reserve *strongly influences* the interest rate charged to major corporations on long-term loans,True/False? ';





that answer would be True.The Federal Reserve establishes the interest rate charged to major corporations on long-term loans,True/False?
False.The Federal Reserve establishes the interest rate charged to major corporations on long-term loans,True/False?
false. they set the prime rate. most banks base their rates off of this.
False.