Not long ago, the discount ratethe interest charge on Government loans to commercial bankswas the Federal Reserve Board's main tool for influencing the economy, and changes in the rate occasionally became hot political issues. In the past year and a half, the Federal Reserve has relied mainly on changes in the pace at which it expands the nation's money supply, and has let the discount rate stay at 6%. When the board finally cut the rate a quarter-point last week, the reaction in the financial community was cheerful butunexcited.
The reduction followed much sharper...
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