Fed kept discount rates steady despite calls for change

WASHINGTON Tue Feb 26, 2013 2:14pm EST

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WASHINGTON Feb 26 (Reuters) - The Federal Reserve declined conflicting requests from two regional Fed boards to change the rate it charges for emergency loans to banks, keeping it steady at 0.75 percent.

The Boston Fed's board again sought a cut in the discount rate the Fed charges banks for emergency loans to 0.5 percent, while the Kansas City Fed repeated its call for a hike to 1 percent, according to minutes of the Fed's discount rate deliberations released on Tuesday.

Under the central bank's current monetary stimulus program, the Fed is buying $85 billion per month in mortgage-backed and Treasury securities. The Fed has vowed to continue buying assets until it sees substantial improvement in the nation's jobs outlook.

Regional Fed directors remained cautious about the prospects for growth, describing the expansion as modest but adding that some downside risks had dissipated. They saw inflation, meanwhile, as subdued.

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