Three Fed banks voted to raise the bank rate in January


Federal Reserve Bank of St. Louis Chairman James Bullard speaks during a public conference in Singapore October 8, 2018. REUTERS/Edgar Su

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Feb 22 (Reuters) – The heads of three regional Federal Reserve banks voted in January to raise the interest rate charged to commercial banks for emergency payday loan by a quarter of a percentage point, officials revealed on Tuesday. minutes of their meetings on discount rates.

Rate hike recommendations – from Fed directors in Cleveland, St. Louis and Kansas City – were reversed two weeks later when US central bankers decided to keep the Fed’s key rate at its current range of 0 to 0.25%. The last time regional Fed banks split on discount rates was in October 2019, when the US central bank cut rates.

Fed bank administrators who supported an earlier rate hike did so “in response to high inflation or to help manage economic and financial stability risks,” according to the minutes. Inflation has more than doubled the Fed’s 2% target.

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The directors of the other nine banks wanted to leave the rate unchanged to continue to support the economy, according to the minutes.

But even at those banks, according to the minutes, “a number of directors noted that it may soon become appropriate” to begin removing adjustment measures in light of inflationary pressures and the strength of the labor market. work.

At the Fed’s January meeting, policymakers sent a similar signal, with Fed Chairman Jerome Powell saying policymakers were “agreed” to start raising interest rates in March.

Fed bank directors aren’t policy makers and don’t set the Fed’s interest rate, but they meet regularly with their respective Fed chairs who say the views of their directors help shape their own outlook.

St. Louis Fed President James Bullard has been one of the Fed’s most hawkish voices in recent months, pushing for 100 basis point rate hikes in the next three meetings.

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Reporting by Ann Saphir Editing by Chizu Nomiyama

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