STATE OF BUSINESS: The Price of Money

In an economy that has so far seen few breaks in prices, one commodity became cheaper last week: money. Following the drop in the Federal Reserve discount rate fortnight ago, major U.S. banks cut their prime rates—those for the biggest borrowers with the best credit—½% to 3½%, the second bankers' cut in the five months in which the Federal discount rate has dropped from 3½% to 1¾%. Other forms of short-term commercial paper, such as 30-to-90-day notes, also dropped ¼% to 1¼%. But for small borrowers and for consumers buying on installments, there were few signs of lower rates....

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