MBS RECAP: 11/29/2011

(Reuters) – The Kansas City Federal Reserve Bank was the only institution in the Fed system to seek increases in the rate the Fed charges banks for emergency loans before the central bank’s policy meeting in early November, meeting minutes showed on Tuesday.

The Dallas Fed, which had sought an increase in the rate, known as the discount rate, in mid-September, joined the other 11 regional Fed banks in agreeing to keep the rate at 0.75 percent.

The discount rate is distinct from the Fed’s principal tool for setting monetary policy, the fed funds rate. The Fed cut the fed funds rate to near zero in December 2008 to pull the economy out of a deep recession.

Fed bank heads said there had been small improvements to the economic recovery, but that financial turmoil due to the sovereign debt crisis in Europe posed a risk.

With the economy growing modestly and energy and commodity prices receding, most bank heads supported keeping the discount rate steady, the minutes said.
The minutes covered meetings held from late September through Oct. 31.
(Reporting by Mark Felsenthal, Editing by Andrea Ricci)

Article source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/237688.aspx

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