Boston Fed Joins Eight Other Banks in Seeking Discount-Rate RiseCraig Torres
The Federal Reserve Bank of Boston joined eight other reserve banks in requesting a quarter percentage-point increase in the discount rate before the Oct. 27-28 meeting of the Federal Open Market Committee.
Directors of the nine regional banks seeking the increase to 1 percent saw the move as warranted “in light of the improvements in labor market conditions this year and their expectations for inflation to rise gradually” toward the Fed’s 2 percent target, according to minutes of the Oct. 26 Fed Board meeting released Tuesday in Washington.
Eight Fed banks had preferred a discount-rate increase in September. The Board held another review of discount rate-requests yesterday. Minutes of that meeting will be released after the Dec. 15-16 FOMC meeting.
U.S. central bankers signaled in their Oct. 28 FOMC statement that they’re preparing to raise the benchmark federal funds rate target in December if the economy makes additional progress toward their goals of maximum employment and stable prices.
The discount rate is the cost of direct loans to banks from the Fed. Regional Fed bank boards vote to decrease or increase the rate subject to approval by the Board of Governors in Washington. The governors, led by Chair Janet Yellen, didn’t approve any change when they met last month.
The discount-rate votes can indicate the preferences of Fed bank presidents, who rotate as voting members on the FOMC. Boston Fed chief Eric Rosengren will be a voter in 2016.
New York and Chicago directors voted for no change in the discount rate, while board members at the Minneapolis Fed again voted to cut the discount rate by a quarter point.