How much higher can the Fed raise the rates?

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How much higher can the Fed raise the rates?

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Question:

Is Alan Greenspan going to raise the PRIME rate by another quarter percent next week? How much higher can they go?

Answer:

Alan Greenspan - on his way out of the office - has said earlier in 2005 that he wants the rates at a reasonable level. At the time of writing, PRIME is 7%. It has been as high as over 20% in 1981- look at the table of historic data below. Most experts think that 8% to 9% is a reasonable range.

The Prime Rate Starting from December of 1947

Date of Change	Prime Rate
Dec 1, 1947	1.75
Aug 1, 1948	2.00
Sep 22, 1950	2.25
Jan 8, 1951	2.50
Oct 17, 1951	2.75
Dec 19, 1951	3.00
April 27, 1955	3.25
Mar 17, 1954	3.00
Aug 4, 1955	3.25
Oct 14, 1955	3.50
April 13, 1956	3.75
Aug 21, 1956	4.00
Aug 6, 1957	4.50
Jan 22, 1958	4.00
April 21, 1958	3.50
Sep 11, 1958	4.00
May 18, 1959	4.50
Sep 1, 1959	5.00
Aug 23, 1960	4.50
Dec 6, 1965	5.00
Mar 10, 1966	5.50
June 29, 1966	5.75
Aug 16, 1966	6.00
Jan 27, 1967	5.75
Mar 27, 1967	5.50
Nov 20, 1967	6.00
April 19, 1968	6.50
Sep 25, 1968	6.25
Dec 2, 1968	6.50
Dec 18, 1968	6.75
Jan 7, 1969	7.00
Mar 17, 1969	7.50
June 9, 1969	8.50
Mar 25, 1970	8.00
Sep 21, 1970	7.50
Nov 12, 1970	7.25
Nov 23, 1970	7.00
Dec 22, 1970	6.75
Jan 6, 1971	6.50
Jan 15, 1971	6.25
Jan 18, 1971	6.00
Feb 16, 1971	5.75
Mar 11, 1971	5.38
Mar 19, 1971	5.25
April 23, 1971	5.38
May 11, 1971	5.50
July 6, 1971	5.75
July 7, 1971	6.00
Oct 20, 1971	5.75
Nov 4, 1971	5.50
Dec 31, 1971	5.25
Jan 24, 1972	5.00
Jan 31, 1972	4.75
April 5, 1972	5.00
June 26, 1972	5.25
Aug 29, 1972	5.50
Oct 4, 1972	5.75
Dec 27, 1972	6.00
Feb 27, 1973	6.25
Mar 26, 1973	6.50
April 18, 1973	6.75
May 7, 1973	7.00
May 25, 1973	7.25
June 8, 1973	7.50
June 25, 1973	7.75
July 3, 1973	8.00
July 9, 1973	8.25
July 18, 1973	8.50
July 30, 1973	8.75
Aug 6, 1973	9.00
Aug 13, 1973	9.25
Aug 22, 1973	9.50
Aug 28, 1973	9.75
Sep 18, 1973	10.00
Oct 24, 1973	9.75
Jan 29, 1974	9.50
Feb 11, 1974	9.25
Feb 19, 1974	9.00
Feb 25, 1974	8.75
Mar 22, 1974	9.00
Mar 29, 1974	9.25
April 3, 1974	9.50

Date of Change	Prime Rate
April 5, 1974	9.75
April 11, 1974	10.00
April 19, 1974	10.25
April 25, 1974	10.50
May 2, 1974	10.75
May 6, 1974	11.00
May 10, 1974	11.25
May 17, 1974	11.50
June 26, 1974	11.75
July 5, 1974	12.00
Oct 7, 1974	11.75
Oct 21, 1974	11.50
Oct 28, 1974	11.25
Nov 4, 1974	11.00
Nov 14, 1974	10.75
Nov 25, 1974	10.50
Jan 9, 1975	10.25
Jan 15, 1975	10.00
Jan 20, 1975	9.75
Jan 28, 1975	9.50
Feb 3, 1975	9.25
Feb 10, 1975	9.00
Feb 18, 1975	8.75
Feb 24, 1975	8.50
Mar 5, 1975	8.25
Mar 10, 1975	8.00
Mar 18, 1975	7.75
Mar 24, 1975	7.50
May 20, 1975	7.25
June 9, 1975	7.00
July 18, 1975	7.25
July 28, 1975	7.50
Aug 12, 1975	7.75
Sep 15, 1975	8.00
Oct 27, 1975	7.75
Nov 5, 1975	7.50
Dec 2, 1975	7.25
Jan 12, 1976	7.00
Jan 21, 1976	6.75
June 1, 1976	7.00
June 7, 1976	7.25
Aug 2, 1976	7.00
Oct 4, 1976	6.75
Nov 1, 1976	6.50
Dec 13, 1976	6.25
May 13, 1977	6.50
May 31, 1977	6.75
Aug 22, 1977	7.00
Sep 16, 1977	7.25
Oct 7, 1977	7.50
Oct 24, 1977	7.75
Jan 10, 1978	8.00
May 5, 1978	8.25
May 26, 1978	8.50
June 16, 1978	8.75
June 30, 1978	9.00
Aug 31, 1978	9.25
Sep 15, 1978	9.50
Sep 28, 1978	9.75
Oct 13, 1978	10.00
Oct 27, 1978	10.25
Nov 1, 1978	10.50
Nov 6, 1978	10.75
Nov 17, 1978	11.00
Nov 24, 1978	11.50
Dec 26, 1978	11.75
June 19, 1979	11.50
July 27, 1979	11.75
Aug 16, 1979	12.00
Aug 28, 1979	12.25
Sep 14, 1979	13.00
Sep 21, 1979	13.25
Sep 28, 1979	13.50
Oct 9, 1979	14.50
Oct 23, 1979	15.00
Nov 1, 1979	15.25
Nov 9, 1979	15.50
Nov 16, 1979	15.75
Nov 30, 1979	15.50
Dec 7, 1979	15.25
Feb 19, 1980	15.75
Feb 22, 1980	16.38

Date of Change	Prime Rate
Feb 29, 1980	16.75
Mar 4, 1980	17.25
Mar 7, 1980	17.75
Mar 14, 1980	18.50
Mar 19, 1980	19.00
Mar 28, 1980	19.50
April 2, 1980	20.00
April 18, 1980	19.50
May 1, 1980	18.75
May 2, 1980	18.50
May 7, 1980	17.50
May 16, 1980	16.50
May 23, 1980	14.50
May 30, 1980	14.00
June 6, 1980	13.00
June 13, 1980	12.25
June 20, 1980	12.00
July 7, 1980	11.50
July 25, 1980	11.00
Aug 22, 1980	11.25
Aug 27, 1980	11.50
Sep 8, 1980	12.00
Sep 12, 1980	12.25
Sep 19, 1980	12.50
Sep 26, 1980	13.00
Oct 1, 1980	13.50
Oct 17, 1980	14.00
Oct 29, 1980	14.50
Nov 6, 1980	15.50
Nov 17, 1980	16.25
Nov 21, 1980	17.00
Nov 26, 1980	17.75
Dec 2, 1980	18.50
Dec 5, 1980	19.00
Dec 10, 1980	20.00
Dec 16, 1980	21.00
Dec 19, 1980	21.50
Jan 2, 1981	20.50
Jan 9, 1981	20.00
Feb 3, 1981	19.50
Feb 23, 1981	19.00
Mar 10, 1981	18.00
Mar 17, 1981	17.50
April 2, 1981	17.00
April 24, 1981	17.50
April 30, 1981	18.00
May 4, 1981	19.00
May 11, 1981	19.50
May 19, 1981	20.00
May 22, 1981	20.50
June 3, 1981	20.00
July 8, 1981	20.50
Sep 15, 1981	19.50
Oct 5, 1981	19.00
Oct 13, 1981	18.00
Nov 3, 1981	17.50
Nov 9, 1981	17.00
Nov 17, 1981	16.75
Nov 20, 1981	16.50
Nov 24, 1981	16.00
Dec 3, 1981	15.75
Feb 8, 1982	16.50
Feb 18, 1982	17.00
Feb 23, 1982	16.50
July 20, 1982	16.00
July 29, 1982	15.50
Aug 2, 1982	15.00
Aug 16, 1982	14.50
Aug 18, 1982	14.00
Sep 3, 1982	13.50
Oct 7, 1982	13.00
Oct 13, 1982	12.00
Nov 22, 1982	11.50
Jan 11, 1983	11.00
Feb 21, 1983	10.50
Aug 8, 1983	11.00
Mar 19, 1984	11.50
April 5, 1984	12.00
May 8, 1984	12.50
June 26, 1984	13.00
Sep 27, 1984	12.75
Oct 16, 1984	12.50

Date of Change	Prime Rate
Oct 24, 1984	12.00
Nov 9, 1984	11.75
Nov 28, 1984	11.25
Dec 20, 1984	10.75
Jan 15, 1985	10.50
May 20, 1985	10.00
June 18, 1985	9.50
Mar 7, 1986	9.00
April 23, 1986	8.50
July 16, 1986	8.00
Aug 27, 1986	7.50
April 1, 1987	7.75
May 8, 1987	8.00
May 15, 1987	8.25
Sep 4, 1987	8.75
Oct 5, 1987	9.25
Oct 23, 1987	9.00
Nov 12, 1987	8.75
Feb 2, 1988	8.50
May 10, 1988	9.00
July 15, 1988	9.50
Aug 11, 1988	10.00
Nov 28, 1988	10.50
Feb 10, 1989	11.00
Feb 24, 1989	11.50
June 5, 1989	11.00
July 31, 1989	10.50
Jan 8, 1990	10.00
Jan 2, 1991	9.50
Feb 4, 1991	9.00
April 24, 1991	9.00
May 1, 1991	8.50
Sep 13, 1991	8.00
Nov 6, 1991	7.50
Dec 23, 1991	6.50
July 2, 1992	6.00
Mar 24, 1994	6.25
April 19, 1994	6.75
May 17, 1994	7.25
Aug 16, 1994	7.75
Nov 15, 1994	8.50
Feb 1, 1995	9.00
July 7, 1995	8.75
Dec 20, 1995	8.50
Feb 1, 1996	8.25
Mar 26, 1997	8.50
Sep 30, 1998	8.25
Oct 16, 1998	8.00
Nov 18, 1998	7.75
July 1, 1999	8.00
Aug 25, 1999	8.25
Nov 17, 1999	8.50
Feb 3, 2000	8.75
Mar 22, 2000	9.00
May 17, 2000	9.50
Jan 4, 2001	9.00
Feb 1, 2001	8.50
Mar 21, 2001	8.00
April 19, 2001	7.50
May 16, 2001	7.00
June 28, 2001	6.75
Aug 22, 2001	6.50
Sep 18, 2001	6.00
Oct 3, 2001	5.50
Nov 7, 2001	5.00
Dec 12, 2001	4.75
Nov 7, 2002	4.25
June 27, 2003	4.00
July 1, 2004	4.25
Aug 11, 2004	4.50
Sep 21, 2004	4.75
Nov 11, 2004	5.00
Dec 15, 2004	5.25
Feb 3, 2005	5.50
Mar 22, 2005	5.75
May 3, 2005	6.00
June 30, 2005	6.25
Aug 9, 2005	6.50
Sep 20, 2005	6.75
Nov 1, 2005	7.00

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