Federal Reserve Bank of Minneapolis board members sought a full percentage point increase in a key emergency borrowing rate for commercial banks ahead of the central bank’s September monetary policy meeting, minutes of discount rate meetings showed on Tuesday.
The Minneapolis Fed directors sought to have the discount rate, which sets the cost for a key emergency lending rate, moved to 3.50% from the 2.50% level it stood at when those directors voted on Sept. 8.
The Fed raised the federal funds rate range by 0.75 percentage point at the Sept. 20-21 Federal Open Market Committee meeting, to between 3% and 3.25%. It raised the discount rate by the same margin, its usual practice, to its current level of 3.25%.
The discount meeting minutes said the boards of the Boston, Cleveland, St. Louis, Philadelphia, Richmond, Atlanta, Chicago, Kansas City and Dallas Fed banks had all voted for a 3.25% discount rate ahead of the September FOMC gathering. Meanwhile, the boards of the New York and San Francisco Fed banks voted for a 3% discount rate, the minutes said.
The 12 regional Fed banks are quasi private intuitions that are each overseen by boards of directors drawn from the private sector. Discount rate votes do not determine where the Fed sets the federal funds rate, its chief tool for influencing the direction of the economy.