Prime Goes to 16 1/4%, Other Money Market Rates Increase Sharply
NEW YORK, Nov. 17ÛÓThe Na-, tionte major banks posted another sharp increase in their prime lending rates yesterday, boosting them to 1614 percent, from 15Û÷/2 percent before. Interest rates in the money markets climbed steeply as well.</br></br>Both developments followed the Federal Reserve BoardÛªs decision late Friday to raise its discount rateÛÓthe interest it charges on loans to member banksÛÓfrom 11 percent to 12 percent. The Fed also tacked on a 2 percentage-point surcharge for big banks that were heavy borrowers at the FedÛªs discount window.</br></br>The surcharge as retroactive to Oct. 2, so some banks presumably found they had to pay 14 percentin interest for funds they borrowedÛªtpriginally at 11 percent from the central bank. The Fed also reported yesterday a big surge in business loan demand during the first week in November.</br></br>Chase Manhattan Bank, New YorkÛªs third largest, led the way today as it has so many times during recent months, both when the prime lending rate was declining sharply last spring, and when it began its most recent climb in August. The prime rate hit 20 percent last April, and then fell to 11 percent by July.</br></br>Chase announced the increase to 1614 percent shortly after 10 a.m., and nearly all major banks had followed by noon. The prime is the interest rate banks charge their best corporate customers for short-term loans. Locally, the Riggs National Bank, largest in the Washington area, announced a similar increase, effective this morning.