Two Fed Bank Chiefs Sought Discount Rate Hike
Directors at the Federal Reserve Banks of Kansas City and Dallas sought quarter percentage-point hikes in the discount rate in late June through July to keep inflation at bay, Fed documents released on Tuesday showed.
Directors at the other 10 regional Fed banks all voted to hold the discount rate steady at 2.25 percent in the same period leading up to the Fed's Aug. 5 interest rate-setting meeting, according to minutes of discount rate meetings released by the Federal Reserve Board in Washington.
The Aug. 5 meeting ended with Fed policy-makers holding the benchmark overnight funds rate unchanged at 2 percent. The Fed board also kept the discount rate, the rate which it charges banks for direct loans from the Fed discount window, unchanged at 2.25 percent.
The minutes of the Fed board's discount rate meetings on July 7, July 21 and Aug. 4 reinforced the more hawkish tone expressed by the Dallas and Kansas City Fed banks.
Dallas Fed Bank President Richard Fisher dissented against the decision to hold the federal funds rate at 2 percent because he preferred an increase. Kansas City Fed President Thomas Hoenig is not a voting member of the policy committee this year but has consistently voiced concerns about the need to combat inflationary expectations.