Upward-Bound Interest Rates

摘要

Chances are you've been reading lately about Federal Reserve Chairman Alan Greenspan's predictions that interest rates will be raised ". .. at a measured pace, in order to control the effects of anticipated inflationary pressures." If you're not sure exactly what that means, join the club. Even members of Congress have been known to puzzle over Greenspan's masterful use of grammatical subtleties. Mr. Greenspan's syntax aside, all signs suggest that the prime interest rate that has been hovering at its lowest levels in nearly 40 years is indeed set for a series of increases over the coming months — and perhaps years. The prime rate is the interest rate charged by banks to their most creditworthy cus- tomers (usually the largest and most stable business customers). With the price of everything from milk to gasoline spiking upward, the specter of inflation is hovering menacingly over the heads of Washington bureaucrats. One sure way to control inflation, so the theory goes, is to put a slight damper on the economy by raising the cost of money. That's done by raising the prime interest rate, an action that only the Board of Governors of the Federal Reserve may take.