FORECASTING PRIME RATE WITH THE LEADING MONETARY POLICY AND SELECT LEADING ECONOMIC INDICATORS: A PILOT STUDY

摘要

An analysis is performed to study the prime rate and how it changes given the explanatory variables.rnThe prime rate is the response variable while the adjusted reserve, consumer price index, discount rate,rnfederal funds rate, M1 and unemployment rate are the explanatory variables. Time series analysis wasrnused to forecast the changes in the prime rate level. The results of this analysis also determine whether arntrend exists and whether the changes in the prime rate are subject to seasonality. The study determinesrnthat the prime rate is at its lowest between the months of December and April of 2002. It is at its highestrnduring the months of June and October 2000.