WASHINGTON, Aug 26 (Reuters) - Three regional Federal Reserve banks, whose presidents are among the more hawkish of U.S. central bankers, continued to press for an increase in the Fed’s emergency lending rate ahead of last month’s policy-setting meeting, according to minutes on Tuesday.
Directors of the Dallas, Kansas City and Philadelphia Fed banks wanted the so-called discount rate raised by 25 basis points to 1.0 percent, in part because of their positive view of the economic outlook and conditions in the financial industry, the minutes said.
Those Fed presidents believe expected economic conditions warranted returning the spread between the discount rate and the federal funds rate back to its pre-crisis level of 1 percentage point. All three have pushed the Fed to tighten monetary policy more quickly, citing the improving economy and inflationary pressures.
The discount rate is what the Fed charges banks who turn to it for funds when they are unable to raise them in the private market. The fed funds rate, which has been near zero since 2008, governs the cost of overnight borrowing between banks and is the Fed’s main monetary policy lever.
The nine other regional Fed banks wanted the discount rate kept at its current 0.75 percent level ahead of the Fed’s July 29-30 policy meeting, the minutes showed.
“Federal Reserve Bank directors generally noted improving economic conditions,” according to the minutes, adding that many firms remained cautious about hiring and continued to report difficulty finding qualified workers for certain positions.
The regional bank heads did not generally see an increase in broader price pressures, the minutes showed. (Reporting by Michael Flaherty; Editing by Paul Simao)