Major Banks Follow the Fed’s Lead, Cut Prime Lending Rates
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NEW YORK — Chase Manhattan Corp., BankAmerica Corp. and other big U.S. banks lowered the rate at which they lend money to their best customers to 8.25% from 8.5% on Wednesday, a day after the Federal Reserve Board cut its target rate for overnight loans between banks.
Chase, BankAmerica, NationsBank Corp. and others cut their prime lending rates, taking the lead from the Fed, which trimmed the target rate to 5.25% from 5.5%.
Banc One Corp., BankBoston Corp., Citicorp, First Chicago NBD Corp., Fleet Financial Group, KeyCorp., J.P. Morgan & Co.’s Morgan Guaranty Trust unit and Wachovia Corp. also cut their prime rates to 8.25% from 8.5%. BankAmerica and NationsBank completed their merger after the close of U.S. markets Wednesday to become the biggest bank in the country.
Other U.S. banks are expected to cut their prime rates. On Tuesday, Norwest Bank Minnesota, the largest banking affiliate of Norwest Corp., lowered its prime rate to 8.25% from 8.5%.
At least one bank, Center Bancorp of Union, N.J., cut the rate to 8% from 8.5%.
The cut in the target rate by the Fed was meant to stimulate the economy by making it easier for companies to borrow money. This becomes more likely as banks lower the rates they charge customers.
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