The Tennessee Department of Financial Institutions has set the state's maximum effective formula rate of interest at 12.00 percent per annum, as revealed in a recent announcement from Commissioner Greg Gonzales. This adjusted interest rate, reflecting a 4 percent increase over the current weekly average prime loan rate of 8.00 percent, will remain effective until further changes by the Federal Reserve, as is the procedure mandated by state legislation.

In a statement, Commissioner Gonzales emphasized that this figure was derived through a formula set by Chapter 464, Public Acts of 1983, designed to routinely adjust similarly along with fluctuations in the prime loan rate. The prime rate, which the Federal Reserve reported yesterday, to be at 8 percent, serves as a benchmark for the Tennessee rate, which must not surpass it by more than 4 percentage points. The Department's duty is to quickly announce the new formula rate each time the Federal Reserve updates the prime loan rate, to ensure always to reflect the current economic conditions.

In Tennessee, this interest rate establishes the maximum legal limit for lending, influencing loans and financial strategies throughout the state. It affects credit card rates, mortgage loans, and other financial products associated with the prime rate.

The latest announcement follows the Federal Reserve's report and is part of standard procedures set by state law. Residents and financial institutions are aware that rising interest rates may soon affect personal savings and business growth strategies.

Further details can be found on the Tennessee Department of Financial Institutions' official website , where the announcement was first made public. For those interested in keeping abreast of the latest changes in Tennessee's financial landscape, referencing the Department's weekly announcements has become an essential practice.