Nashville, TN – In a move closely watched by bankers and borrowers alike, the Tennessee Department of Financial Institutions declared a significant update to the state’s interest rate policy. Commissioner Greg Gonzales, leading the announcement, specified that as of February 27, 2024, the maximum effective formula rate of interest for Tennessee will be fixed at 12.50 percent per annum.
This decision is closely tied to the current financial climate, taking into account the weekly average prime loan rate of 8.50 percent as recently published by the Federal Reserve on February 26, 2024. The new rate represents a ceiling set at 4 percent above this base rate, a formula dictated by the specific financial legislation within the state.
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The legislation in question, Chapter 464, Public Acts of 1983, prescribes that the commissioner of Financial Institutions must weekly announce the formula rate of interest. This ensures that Tennessee’s financial practices remain transparent and closely aligned with the broader economic conditions governed by federal financial policies.
Commissioner Gonzales emphasized that this updated rate will stay in effect until there is a change in the average prime loan rate as announced by the Federal Reserve Bank. This mechanism ensures that state interest rates remain responsive to the national economic landscape, adapting as necessary to changes in the prime loan rate.
The announcement is expected to have a range of implications for both the lending and borrowing sectors within the state, influencing everything from personal loans to business financing conditions. Financial analysts will be watching closely to see the impact of this rate adjustment on the local economy, particularly in terms of consumer spending and investment trends.
For further information, the public and interested parties are encouraged to contact Alica Owen, Public Information Officer at the Tennessee Department of Financial Institutions.
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