Fed Mulls Discount Rate Cut Under Pro and Con Pressures: Interest Rate Effect Dollar Worry
The Federal Reserve Bo; is under some unusually c tradictory pressures as wrestles with whether to eui its discount rate soon.</br></br>A reduction from the 5'i: per cent rate set last April 19 on loans to member commercial banks is widely ranked as an eventual rertainity, but there's still sizable doubt as to whether action might come, within a few' days or be delayed for a month or more.</br></br>From the domestic economic standpoint some monetary strategists reckon on early discount-rate cut would be ideal.</br></br>It would confirm the general trend to lower interest rates, they reason, but without the consequent increase in inflationary money creation that would come through the other options of lowering hank reserve requirements or liberalizing open-market operations.</br></br>Only if interest rates generally are kept on a pronounced downward course, key Johnson Administration men figure, will enough extra money lie channeled into mortgages to permit increased housing starts. This in turn is held vital in helping keep the overall economy from cooling too much.