Federal Reserve Ready to Lower Interest Rates / Say Economists, Analysts

By Tom Raum, Ap | THE JOURNAL RECORD, July 1, 1986 | Go to article overview

Federal Reserve Ready to Lower Interest Rates / Say Economists, Analysts


Tom Raum, Ap, THE JOURNAL RECORD


WASHINGTON (AP) - The Federal Reserve Board will move within the next few days to lower interest rates for the third time this year in an e ffort to stimulate a slumping U.S. economy, economists and analysts predicted Wednesday.

""It may be by a full percentage point. At this stage, with everyone expecting it, a half percentage point would be anticlimactic,'' said Lawrence Chimerine, president of Chase Econometrics of BalaCynwyd, Pa.

Analysts appeared in near-unity that a cut in the bellwether ""discount'' rate, which the Fed charges for direct loans to member banks, from the current 6.5 percent to 6 percent or less is now imminent. Changes in the discount rate usually lead to corresponding interest rate movement throughout the economy.

""There is a 50-50 chance the Fed will do it by the end of this week, a 75 percent change by the end of next week and a 100 percent chance by the end of the following week,'' said Michael Evans, head of an economic forecasting service here. ""The only thing holding them up may be just that everyone expects the discount rate cut.''

Speculation of an impending interest rate cut came as Fed policymakers finished a two-day closed-door meeting to chart U.S. monetary policy for the second six months of 1986.

And it comes as the Fed has been under increasing pressure from Congress and the White House to cut the discount rate.

Late last week, Senate Majority Leader Bob Dole, R-Kan., publicly prodded the Fed to take such a move. And as recently as Monday, White House chief of staff Donald T. Regan put the Reagan administration on record as favoring such a cut.

Observers said that, beyond the talked-about cut in the Fed's discount rate, the central bank might take other steps to ease credit policy - including a modest reduction in the federal funds rate, now at 6.75 percent.

This is the interest rate that banks charge other banks for short-term purchases of government securities to meet a bank's requirement for cash reserves against deposits.

""All attention is focused on the discount rate. But, given the cross-currents in the Federal Reserve, reducing the discount rate is not the only way to bring about a relaxation in monetary policy,'' said Allen Sinai, chief economist for Shearson Lehman Bros.

Sinai said a further dose of lower interest rates seems necessary to stimulate growth, not just in the United States but throughout the industrialized world. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Federal Reserve Ready to Lower Interest Rates / Say Economists, Analysts
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.