US banks lower prime rate after Fed cuts key rate

NEW YORK, April 30 (Reuters) - U.S. banks on Wednesday began lowering their prime rate, a borrowing rate that banks charge their best customers, to 5.00 percent from 5.25 percent.

Bank of America Corp (BAC.N: Quote, Profile, Research), the nation's biggest retail bank, was the first large bank to announce a reduction. Other banks of all sizes are expected to follow.

The decrease came after the Federal Open Market Committee, the policy-making body of the U.S. Federal Reserve, lowered its key overnight rate on loans between banks by 0.25 of a percentage point to 2.00 percent.

Most lending institutions use the overnight rate, known as the federal funds rate, as a benchmark for what they charge consumers for everything from credit cards to home loans. (Reporting by Jonathan Stempel; Editing by Steve Orlofsky)