Six regional Fed banks opposed last month’s interest rate hike

FILE PHOTO: FILE PHOTO: A guard walks in front of a Federal Reserve image before press conference in Washington
FILE PHOTO: A security guard walks in front of an image of the Federal Reserve following the two-day Federal Open Market Committee (FOMC) policy meeting in Washington, DC, U.S. on March 16, 2016. REUTERS/Kevin

January 15, 2019

(Reuters) – Half of the U.S. Federal Reserve’s 12 regional banks voted in December against raising interest rates, even as the central bank’s rate-setting committee was signaling it would increase borrowing costs, minutes from discussions showed on Tuesday.

In voting to hold steady the rate commercial banks are charged for emergency loans at 2.75 percent, the directors of the New York, Philadelphia, St. Louis, Minneapolis, Kansas City and Dallas Fed banks said “that downside risks to the economic outlook had increased somewhat, primarily reflecting increased uncertainty about trade policy and international developments,” according to the minutes.

Directors at the Atlanta, Cleveland and San Francisco Fed banks had also voted after the central bank’s November policy meeting to hold the emergency rate steady, but changed their votes to support an increase when they again met on Dec. 13. Three other regional Fed banks – Boston, Richmond and Chicago – supported a rate increase on Dec. 6.

The Fed raised its benchmark overnight lending rate to a range of 2.25 to 2.50 percent at its Dec. 18-19 policy meeting.

(Reporting by Ann Saphir; Editing by Paul Simao)

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