Interest rates clarity

[woodywoodford]

So with the FOMC announcement coming up in a couple hours I decided it's time to get some clarity on this stuff. After 6 years of education on it I've never actually dug in.

The feds rate, as being discussed by the FOMC today, is currently at 0.25% right? What does this rate apply to?

I always assumed the rates were just bond rates in the newest central bank issues, but apparently that's not the case.

I then assumed it was the prime rate so that my student loans at prime+2.5%, the 2.5% would be the banks markup, but that's ALSO not the case.

How do these all play together??? Am I missing a step here?

[Tik-Tok]

You have American student loans?

[yellowsnow]

Bank of Canada's lending rate is at 1% currently. The banks usually set their 'Prime' rate based on the lending rate, which is currently set at 3%. Banks are free to set their interest rates to anything they want.