No. 3 US bank raises prime rate to 19 3/4%
Chase Manhattan, the nation's third-largest bank, raised its prime lending rate to a record 19 3/4 percent Tuesday, from 19 1/4 percent. The prevailing rate is 19 1/2 percent.
Citibank of New York, normally a trend-setter, boosted its prime, the rate that is charged the most creditworthy corporate customers, to 19 1/2 percent from 19 1/4. First National Bank of Chicago took a similar step Monday.
Banks have raised this key rate because the Federal Reserve has tightened and restricted credit, forcing interest rates sharply higher. Many analysts predict the rate will soon rise above 20 percent.