Most Interest Rates Fall on Speculation Of Further Credit-Easing Action by Fed
NEW YORK -- Most interest rates declined yesterday, amid widespread speculation that the Federal Reserve System will ease credit conditions further in an attempt to bolster the economy.</br></br>A sharp drop in oil prices, coupled with the decline in short-term rates, helped drive up bond prices. Some actively traded Treasury bonds rose about a point, or around $10 for each $1,000 face amount.</br></br>Rates at the Treasury's weekly bill auction tumbled to their lowest levels in more than eight and a half years. The rate on new 13-week bills averaged 5.84%, compared with 6.19% at last week's sale. That was the lowest since Sept. 2, 1977, when similar bills sold at an average rate of 5.554%. The average rate on new 26-week bills fell to 5.93% from 6.17% and was the lowest since a 5.845% rate, also set at the Sept. 2, 1977 sale.</br></br>Many analysts say government figures to be released this week will show the economy remained weak in the first quarter. This, they contend, will prod the Fed to push interest rates down further. "It's just about engraved in stone that we're going to get a discount rate cut soon," said Robert A. Brusca, senior vice president and chief economist at Nikko Securities Co. International.</br></br>"The Fed will cut the discount rate to 6 1/2%" shortly, agreed Lawrence N. Leuzzi, an economist at S.G. Warburg & Co. The discount rate, the fee charged by the Fed on loans to financial institutions, was lowered to 7% from 7 1/2% March 7.