Prime Cut: Rates drop, but to what avail?

Rates drop, but to what avail?

Economic theory says that in sluggish times lower interest rates will help spur production and growth. Theoretically, then, economists should have applauded loudly last week when major U.S. banks cut the prime lending rate that they charge many business clients from 8% to 7.5%, the lowest level since 1977. Instead of hoorays, though, the news was met with skepticism. The reason: many economists now doubt that further cuts in interest rates will give much of a boost to the economy, which was muddling along at only a .6% annual clip in the second quarter. Another sign of the economy's mixed prospects...

Want the full story?

Subscribe Now


Get TIME the way you want it

  • One Week Digital Pass — $4.99
  • Monthly Pay-As-You-Go DIGITAL ACCESS$2.99
  • One Year ALL ACCESSJust $30!   Best Deal!
    Print Magazine + Digital Edition + Subscriber-only Content on

Learn more about the benefits of being a TIME subscriber

If you are already a subscriber sign up — registration is free!