One regional Fed sought discount rate cut, three a hike

WASHINGTON Tue Oct 15, 2013 2:04pm EDT

WASHINGTON (Reuters) - Directors of one regional Federal Reserve bank sought a quarter percentage point cut in the Fed's emergency discount rate last month, while three other regional branches renewed their requests for a hike, the U.S. central bank said on Tuesday.

Minneapolis Fed directors voted for a cut to 0.5 percent, while the boards of the Kansas City, Philadelphia and Dallas Federal Reserve banks all repeated requests for a discount rate increase to 1.0 percent. That would have lifted the discount rate to 75 basis points above the overnight Fed funds rate.

"Directors requesting an increase ... were interested in moving toward the 100-basis-point spread in the pre-crisis discount rate structure," the Fed said.

Votes on the discount rate, which is a penalty rate charged by the Fed for banks accessing its emergency lending window, are largely symbolic gestures designed to signal a more dovish, or more hawkish, policy preference by the regional branch.

"Those directors favoring a reduction in the primary credit rate believed that a looser setting would help to foster the Committee's macroeconomic objectives of maximum employment and price stability," the central bank said.

The Fed left its overnight funds rates unchanged in a range between zero and 0.25 percent when policymakers met in September, but surprised markets by opting to keep buying bonds at an $85 billion monthly pace.

(Reporting By Alister Bull; Editing by Andrea Ricci)

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