Four Fed bank boards wanted rate hike, minutes show
Their rate recommendations provide an insight into how contested the Fed policymakers’ final decision was
Minutes released on August 25 revealed that four directors of the Federal Reserve's 12 banks voted to raise the interest rate charged to commercial banks for emergency loans prior to the central bank's July meeting. The Fed policymakers ultimately decided in a 9-3 vote to maintain the policy rate unchanged during their July 28 to 29 meeting.
This information sheds light on the contentious nature of the Fed's decision. The four directors who supported a quarter of a percentage point increase were those from the Dallas, Cleveland, Minneapolis Fed, and the Kansas City Fed. Notably, the Kansas City Fed's president, Jeff Schmid, did not have a vote this year on the policy rate.
Although the regional Fed bank directors do not have the power to determine the Fed's interest rate, they meet regularly with their respective Fed presidents. The Fed bank directors' views are believed to influence their presidents' outlooks. The discount rate, which was voted on by the regional Fed bank boards, is ultimately set by the Fed Board to align with the top of the range of the policy target rate. This rate has been between 3.5 percent and 3.75 percent since December.
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