Word: rate
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Dates: during 1970-1979
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...rate, the Council considers the issue a dead letter. MacCaffrey shrugs when asked if the useless drain on committee time exasperates him. When it comes to faculty committees, MacCaffrey says, "I am used to the high wastage of time." He accepts the Council's decision with democratic resignation: "We live in a world of majority decisions." Perhaps. It all depends on whose majority he is talking about. After all, the Student Assembly referendum last year revealed that about 3400 undergraduates polled wanted the University to establish a study abroad program that would offer academic credit and satisfy language requirements. Only...
...immediate and unusually sharp 1% rise, from 11% to 12%, in the discount rate, which is the interest the Federal Reserve charges to commercial banks that borrow funds from it. Since Federal Reserve rules require banks to keep a certain amount of money in reserve for every dollar in loans to customers, banks that want to increase their lending sometimes turn to Federal Reserve discount funds to do so. Pushing up the cost of those funds discourages banks from borrowing and thereby helps hold down the expansion of credit...
...market break came on Tuesday. That was when the naition's banks reopened after the Columbus Day holiday, and made their response to the Fed's discount-rate rise. Led by Chase Manhattan, the nation's third largest bank, several institutions immediately raised the prime rate (the interest charged the most credit-worthy corporate customers) from 13.5%, already a record, to a new peak of 14.5%. Since quarter-point raises are the norm, the effect of the full-point boost in the prime was electric. Not only did it push the interest charged to margin investors up close...
Left to itself, the accelerating demand for credit would have quickly pushed interest rates far beyond the target that the Federal Reserve had set. For instance, interest on six-month Treasury bills, which is used as a guide for regulating interest on certain bank deposits, would have leaped alarmingly. To keep money markets stable, the Fed's so-called Open Market Desk in New York was forced to begin making more and more money available to banks in order to satisfy demand for funds. Indeed, though the Fed's own inflation-cooling monetary growth target was 4.5%, which is just...
Demand for credit ballooned. In the past four weeks alone, loans to business jumped at a rate of 23%, while the commercial paper market, which is where big corporations trade megabuck lOUs back and forth among themselves, leaped by an astonishing...