The Price of Money

In an economy that has so far seen few breaks in prices, one commodity became cheaper last week: money. Following the drop in the Federal Reserve discount rate fortnight ago, major U.S. banks cut their prime rates--those for the biggest borrowers with the best credit-- 1/2% to 3 1/2%, the second bankers' cut in the five months in which the Federal discount rate has dropped from 3 1/2% to 1 3/4%. Other forms of short-term commercial paper, such as 30-to-90-day notes, also dropped 1/4% to 1 1/4%. But for small borrowers and for consumers buying on installments, there were few signs of lower rates. Unless these rates also start to fall soon, the FRB is expected to ease credit still further and force them down.

Only in housing were rates softening. As a result, appraisal requests for G.I. housing loans in the first half of April totaled 11,067, more than all of March. If the pickup continues, April will be the best month in more than a year.

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