In a move that impacts borrowers and lenders across the state, Tennessee's financial overseer has just set a new bar for interest rates. Commissioner Greg Gonzales announced yesterday that Tennessee will cap its maximum effective formula interest rate at 12.00 percent per annum.
The latest decision, outlined on the Department of Financial Institution’s website, is based on a variable scheme: it’s set at 4 percent above the prevailing weekly average prime loan rate. Since the Federal Reserve reported a prime rate of 8.00 percent on Monday, the rate is set at 12 percent. This rate will remain in effect until the Federal Reserve adjusts the prime loan rate.
Regulating interest rates is a key part of the commissioner’s role, a responsibility established by Chapter 464, Public Acts of 1983. Gonzales's office publishes the state's interest rate position weekly, providing a snapshot of Tennessee’s financial climate.
