Prime rate breaks record, hitting 21%
New York — Morgan Guaranty Trust Company became the first bank to raise its prime rate through the 20 percent level, moving one point to a new record, 21 percent. The nation's fifth- largest bank said it was responding to "the cost of funds and demand for loans." Several other banks immediately followed suit. The prime is the rate banks usually charge on loans to corporate customers with top credit ratings, and rates on most business loans are scaled upward from it.