P.M. BRIEFING : ‘Lonely’ St. Louis Bank Raising Its Prime Rate Back to 10.5%
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ST. LOUIS — Reversing an action it took earlier this month, Southwest Bank of St. Louis, a regional bank that often sets the trend on commercial interest rates, said today it was “feeling lonely” and would raise its prime rate back to 10.5% from 10%.
When the bank dropped its rate to 10% on Nov. 8, analysts expected others to follow its move.
But major banks did not cut their prime rates and recent signs that the Federal Reserve has not eased credit have made them even more reluctant to do so, economists said.
Southwest Bank Vice Chairman Linn Bealke said in an interview with Reuters that the bank had been slow to reverse the course taken earlier in the month.
“We were reluctant to do it. We weighed it very heavily,” Bealke said.
“It was getting lonely. No other banks have followed. As long as the Fed wants to hold rates higher, I don’t expect any other banks to follow,” Bealke said.
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