A More Severe Recession Seen Taking Hold Early in 1980: Prime Rate Drop Surest Sign Yet Of Fed's ...
Analysts generally donÛªt mark turning points in the economic cycle anywhere near that precisely, but to some onlookers 12:15 p.m. last Monday may serve symbolically as the time the 1979-80 recession began to show up in earnest.</br></br>ThatÛªs when Bankers Trust Co., followed by several other large banks, announced it was trimming its prime lending rate for large corporations to 15V2 percent from the record 15% percent that had prevailed before.</br></br>The move, which reversed four months of steady and sharp increases, was of course merely a symptom, not a cause, of the newest shift. Analysts may be debating for</br></br>There also were warnings from several economists' that the turnaround might prove to be a false peak and that interest rates might turn up again. That happened several times earlier this year, and rates later climbed further.</br></br>But at the least, the drop in the prime marked the surest sign yet that the steps taken by the Federal Reserve Board last Oct. 6 to spur interest rates and tighten credit sharply finally are beginning to show results. There were these developments: Û¢ The runaway growth in the nationÛªs money supply, which had concerned Fed officials only a few weeks ago,