U.S. interest rates fall

Press, 14 June 1980, Page 19

U.S. interest rates fall

NZPA-Reuter New York| Several major United: Spates banks cut their printel lending rate by half a percentage point to 12.5 per cent yesterday, continuing a steady decline in the key interest rate. Citibank, the nation’s second largest bank, was the first to trim its rate, and was later joined by Bank of j America, the largest, and) Manufacturers Hanover 1

(Trust, among others. The (move followed a prime rate ( reduction to 12 per cent by /the First National Bank of Boston on Wednesday. ■I The prime lending rate, i the interest banks charge on ' loans to their best corporate customers, has fallen sharp- ■ ly in recent weeks since it > reached a peak of 20 per 11cent in early April. Fl The decline in the prime Ijrate reflects reduced demand • ; for bank loans as the econo-

my heads into a recession. The latest move also) brings the key bank rate! more in line with other short-term interest rates, which have fallen faster than the prime. Commercial paper, or corporate 1.0.U.’5, for example, now carry an interest of about 8 per cent. The prime rate cut also means a reduction in other bank interest rates, many of which are linked to the prime rate.