The primary credit rate, the interest rate on short-term loans offered to generally sound banks through the central bank's discount window, has been set at 0.75% since February 2010. At a meeting of the Washington-based Fed Board of Governors on June 15, "no sentiment was expressed" for changing it, according to minutes released Tuesday.
But support for a higher discount rate is rising among the regional reserve banks, with directors from five banks voting in June for the rate to be set at 1%. The Dallas Fed, the Kansas City Fed and the Philadelphia Fed have long supported raising the discount rate. They were joined in March by the Cleveland Fed, and the Richmond Fed followed suit last month.
"The 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, favored a move back toward the pre-crisis spread in light of their outlook for economic and financial conditions as well as the risks to that outlook," according to the minutes.
The Minneapolis Fed in June asked for a reduction in the discount rate to 0.5%, as it has since March. The other six regional reserve banks asked for the rate to remain at 0.75%.
The split over the discount rate has deepened amid a growing debate within the Fed on the broader federal-funds rate, which has been anchored near zero since December 2008. Policy makers have said they expect to begin raising the benchmark fed-funds rate this year, but the precise timing of the first rate increase remains up in the air.
Write to Ben Leubsdorf at Ben.Leubsdorf@wsj.com
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(END) Dow Jones Newswires
July 14, 2015 15:40 ET (19:40 GMT)
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