Regional Fed banks still split on discount rate cut/hike need
WASHINGTON (Reuters) - One regional U.S. Federal Reserve bank continued to seek a quarter point cut in the discount rate last month while three other branches pushed for a matching hike, but the Fed Board in Washington decided to leave rates unchanged at 0.75 percent.
Minneapolis Fed directors sought a cut to 0.50 percent in the discount rate, which is the level at which banks may borrow from the central bank if they are unable to raise funds in the private market. Dallas, Philadelphia and Kansas City requested a hike to 1.0 percent, according to documents released on Tuesday.
"Those directors requesting an increase, which would widen the spread between the primary credit rate and the upper end of the target range for the federal funds rate to 75 basis points, were interested in moving toward the 100-basis-point spread in the pre-crisis discount rate structure," the Fed said.
"Those directors favoring a reduction in the primary credit rate believed that a lower setting would help to foster the Committee's macroeconomic objectives of maximum employment and price stability," it added.
The central bank's policy-setting committee subsequently decided at a meeting on October 29-30 to hold the overnight fed funds rate near zero, and to keep buying bonds at an $85 billion pace in an effort to hold down the long-term cost of borrowing.