Chemical Bank raised the interest rate for prime business loans from 11 1/2 percent to the prevailing 12 percent level Nov. 16, following a surge in the nation's money supply. Chemical had cut its key lending rate to 11 1/2 percent on Oct. 22, but no other major banks followed.
A larger-than-expected $2.7 billion surge in the M-1 money supply, disclosed Monday, triggered Chemical's action and dimmed Wall Street hopes that the Federal Reserve would lower its discount rate.
Chemical's action also followed a warning late Monday by the White House Office of Management and Budget that interest rates, inflation, and unemployment all could rise in the first half of 1983. Senior White House budget officials expressed concern that the Fed has turned overly expansionary in recent months.