The Michigan Daily-Tuesday, Ju'he 2, 1981-Page 5
TREND TOWARD DECLINING INTEREST RATES WANES
Feds drain money from banks
W YORK (AP)-Several leading banks opened THE DRAIN WAS "sudden and unexpected," said checklist store dropped 1.3 percent last month.
ass yesterday by lowering their prime lending David Jones, an analyst with Aubrey G. Lanston & " More than one-third of the items checked by the
but what had been widely expected to develop Co. AP-35.2 percent-went down during May. Less than
trend evaporated when the Federal Reserve In other economic news, supermarket prices drop- one-fourth, 22.5 percent, went up.
unexpectedly drained money from the nation's ped during May for the fourth month in a row, accor- * There were widespread bargains at the meat
ng system. ding to an Associated Press marketbasket survey. counter, reflecting the low price of livestock during
lysts had expected general declines in interest But economists keep warning that the good 'news much of the early part of this year.
largely because the Fed reported Friday that won't last forever. THE AP FOUND that the price of chopped chuck
tion's money supply had declined $2.2.billion in There were two major reasons for the latest round went down at the checklist store in six cities during
est reporting week. That was viewed as an in- of price drops: a continuing and substantial decrease May; pork chops also were down in six cities; and
r that the Fed had money supply growth under in the price of sugar and lower prices for beef and frankfurters decreased in five cities.
l as a defense against inflation and would not pork in many places. The government had been predicting sharp food
r tighten credit. THE AP DREW up a random list of food and non- price increases this year because of last summer's
JS, A FEW banks lowered their prime lending food items and priced the list at one supermarket in bad weather. That hasn't happened so far, but the
esterday morning, some by a full percentage each of 13 cities on March 1, 1972. Prices are picture may change soon.
and the Dow Jones industrial average surged rechecked on or about the start of each month. Sugar prices, for example, have been declining
1,000 for the first time in a month. Among the findings of the most recent survey: steadily since the start of 1981 and may have fallen as
then the Fed unexpectedly announced it would " The marketbasket bill went up last month at the low as they are going to go.
w back some cash reserves on deposit at its checklist store in three cities and declined in 10. The U.S. Department of Agriculture says ranchers
er banks, making less money available for Overall, the marketbasket bill dropped an average of and pork producers, who have been losing money, are
That put ahalt on further moves to a 20 percent .7 percent during May, the biggest dip since April gradually reducing the size of their herds. The USDA
rate, from 20.5 percent, and sent other interest 1975. predicts that retail prices for choice beef will hit $2.5
ipward. " More than half the May decline was due to a drop a pound by the end of June, up from an average of
reversal also erased gains made in the bond in the price of sugar. When sugar was removed from $2.37 during the first quarter of the year.
t Friday and early yesterday. the marketbasket totals, the average bill at the
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