Discount Rate, Loan Reserve Up: Feci Takes New Steps To Combat Inflation
Thp Federal Reserve Ro aid yesterday lnnl< its st rongest anti-inflat innary action to dale, boosting to 7 per cent the rale it charges member banks to borrow from it and knocking S800 million out of the reserves on which banks can make loans.</br></br>'I'lte actions are designed to squeeze banks and limit the huge expansion of loans that has been taking place this year.</br></br>In a statement, the Fed's seven-member board of governors cited the "continuing excessive expansion in money and credit" as grounds for its actions. The move was unanimous, a Fed official said.</br></br>The moves will increase the cost of money to hanks, and should slow the growth of the money supply and loans.</br></br>.lust a few hours after the Fed announced its action, Girard National Rank of Philadelphia announced that it would raise its . prime interest rate- the rate it charges its best business customers lor a short-term loanÛÓto 8 per cent. It had been 7.7a per cent.