Answer to Question #53118 in Other Management for Alexander
Explain eight measures that need to be taken to tame banks against charging high interest rates on loans especially in developing economies.
When the Federal Reserve (Fed) raises or lowers interest rates a chain reaction is set into motion. If the fed raises interest rates, banks raise their prime rate, which in turn affects mortgage rates, car loans, business loans, and other consumer loans. However, a bank can raise or lower their prime rate without the FED making the first move. It is uncommon for most banks to change their prime rate without the fed making the first move - but it does happen.
Lower interest rates usually spur the economy by making corporate and consumer borrowing easier. Higher interest rates are intended to slow down the economy by making borrowing harder.