One of the nation's largest banks has cut its prime lending rate by half a percentage point to 9.5 percent in response to the Federal Reserve's efforts to prevent the recession from deepening.

First National Bank of Chicago, the 13th-largest U.S. banking company, said it would decrease its rate by the same amount the Fed lowered one of its key lending rates Tuesday.Earlier in the month, a handful of regional banks took a more cautious step by easing their prime rates to 9.75 percent, but analysts said larger institutions were waiting for a cue from the Fed before following suit.

"It is a long-overdue adjustment," said William Sullivan, director of money market research at Dean Witter Reynolds Inc. "The fact that this is the first major national money center bank to go might trigger others to follow soon."

Sullivan noted that the 0.5 percentage point cut was a bit steeper than had been expected, but he said it indicated that banks "are finally taking the message that the Fed wants rates lower."

The prime rate guides bank lending charges for many business and consumer loans.

On Tuesday, the Fed cut the discount rate - the interest it charges on loans to member banks - to 6.5 percent from 7 percent, the first decline in the rate since August 1986. The Fed also has been gradually cutting the federal funds rate, which banks charge each other on overnight loans.

James Annable, First Chicago's chief economist, said that by easing the federal funds rate, the nation's central bank "is telling the market that we are taking this recession seriously." And once that rate moved lower, it was time to "pass it on to our customers."

Annable said consumers should see declines next month on loans that are tied to the prime rate, like home equity lines of credit.

Major banks have hesitated to move ahead of the Fed because they are concerned about their own profit margins.

The last industrywide cut in the prime rate occurred Jan. 8, when the rate when from 10.5 percent to 10 percent.