Minutes released by the Federal Reserve on October 13 show how requests from regional Reserve Bank directors increased before September’s increase in the primary credit rate from 3.75% to 4%.
At the Board of Governors’ August 17 review, Cleveland and Kansas City directors had requested 4%, while ten Reserve Banks sought to keep 3.75%. The Board held the rate unchanged. By its September 9 review, Chicago and Minneapolis had joined the requests for 4%, but the Board again retained 3.75%.
Seven Reserve Banks had requested the higher rate by the September 16 meeting, with Richmond, Atlanta and Dallas joining the other four. The Board approved a 25-basis-point increase that day, effective September 17. The minutes record that the remaining five Reserve Banks subsequently received approval for 4%, also effective September 17.
The primary credit rate applies to lending to depository institutions through the Fed’s discount window. The Board’s discount-rate process is separate from the Federal Open Market Committee’s decisions on the federal funds target range; the regional requests were not FOMC votes.
The September 9 account also records directors’ observations of generally stable economic and labor-market conditions. Most directors cited input-cost pressures from oil and fuel, tariffs, health care expenses and competition for resources and supplies associated with the artificial intelligence buildout.
