(Reuters) – The Kansas City and Dallas Federal Reserve banks pressed for an increase in the rate the Fed charges banks for emergency loans ahead of the central bank’s last policy gathering, meeting minutes showed on Tuesday.
Directors at the Kansas City Fed voted three times, from mid-August to mid-September, to request the Fed’s Washington-based Board of Governors raise the discount rate. The Dallas Fed sought an increase at only the most recent of its three meetings during the period.
The other 10 regional Fed banks wanted to keep the so-called discount rate at its current level of 0.75 percent, and the Fed board sided with the majority, minutes of discount rate meetings released on Tuesday showed.
Supporters of an increase in the discount rate to 1 percent from 0.75 percent wanted to normalize the difference between the emergency loan rate and the Fed’s benchmark fed funds rate, which is in a range between zero and 0.25 percent, according to the minutes.
The fed funds rate, which the Fed sets by buying and selling short-term Treasury securities with dealers, is historically the central bank’s main lever for accelerating or slowing economic growth. The Fed has kept the short-term rate near zero since December 2008 to pull the economy out of recession and support recovery.
(Reporting by Ann Saphir; Editing by Leslie Adler)