Bankers Trust, the nation’s eighth-largest bank, cut its prime lending rate today by a half percentage point to 10%, its lowest level in more than 6 1/2 years.
Analysts had been predicting a cut in the prime rate for several weeks because the interest rates set in the money markets, where banks get a sizable portion of their lendable funds, have fallen.
The reduction by Bankers Trust, the first in the industry since mid-January, put the widely watched interest charge at its lowest level since October, 1978.
Only one small bank--Mitsui Manufacturers of Los Angeles--immediately followed Bankers’ lead.
But David Blitzer, chief economist at Standard & Poor’s, said he believed that other banks will adopt the lower rate.
“I would guess that Bankers is fairly confident in making the move, and we should see other banks follow,” he said.
The prime rate is a benchmark against which banks measure rates on other short-term loans to small- and medium-size businesses. Large businesses are often able to borrow at rates below the prime rate, while many smaller borrowers frequently must pay more.
The prime has been falling since Sept. 27, when it was cut to 12.75% from the 13% level that had prevailed for three months.