The latest round of interest rate hikes, which has been criticized sharply by administration officials, may put pressure on the Federal Reserve Board to raise its discount rate again.
Despite recent complaints from President Carter and other admininstration officials, banks have continued to push up their prime lending rates in the last days of the election campaign.
There has been a rise of 2 percent or 2 1/4 percent in the key prime lending rates of major banks since the Fed last raised its discount rate on Sept. 25. It now stands at 11 percent. Wednesday's half-point increase in the prime, which now stands at 14 1/2 percent, has left the Fed's discount rate somewhat out of line with the market.
Treasury Secretary G. William Miller yesterday condemned the latest jump in the rate, saying "I think that, when I didn't like the 14 percent rate, I don't like the 14 1/2 percent rate even more."
Commercial banks have defended their prime rate rises by pointing out that the cost of the funds which they have to borrow in the money market has gone up. This has forced them to charge more for the money they lend, they say.
But administration officials and Federal Reserve Board Chairman Paul A. Volcker have suggested that banks are quicker to increase their rates than to lower them. In the past year there have been dramatic swings in interest rates, partly as a result of a switch in the Fed's method of money control.
The board now aims to control the money supply through its supply of reserves to the banking system, rather than indirectly through manipulation of interest rates. This means that rates vary much more than they used to and that the market has some difficulty in determining the appropriate level of interest rates.