To signal its significant shift toward an easier credit policy, the Federal Reserve Board last week made a headline-catching move. It cut the cost of loans to member banks by approving a drop in the discount rate to 3½% from 4% for its district banks in Philadelphia and San Francisco. Such cuts are usually followed by similar cuts at the rest of the twelve Federal Reserve district banks.

Since many banks are still under strong pressure from businessmen for loans, bankers do not expect the Fed's move to bring any quick cut in commercial loan rates. But lower...

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