Two Fed Bank Boards Wanted A 100-Basis-Point Discount Rate Rise In July

• The board of directors of the Minneapolis and St. Louis Federal Reserve banks voted in mid-July for a full-percentage-point increase in the rate charged to commercial banks for emergency loans, minutes of their discount rate meetings showed on Tuesday, August 23, 2022. Directors on the Kansas City Fed's board voted for a half-percentage-point rate increase, the minutes showed.
• The recommendations from all three banks were overruled when Fed policymakers at their July 26-27 policy meeting opted for a 75-basis-point increase to the benchmark policy rate. The Fed's nine other regional bank boards had already backed a 75-basis-point increase in the discount rate.
• The split among the Fed banks over the proper setting of the discount rate - which is different from but moves in tandem with the rate set by the Fed's policy-setting Federal Open Market Committee - suggests increasing discord over how aggressively the U.S. central bank should act in the face of decades-high inflation.
• Minneapolis Fed President Neel Kashkari and St. Louis Fed President James Bullard are the Fed's two most hawkish rate-setters, and both have pushed for steeper increases than most of their colleagues.
• Kansas City Fed President Esther George, who later this week hosts a key annual global central bankers' conference in Jackson Hole, Wyoming, dissented in June against the Fed's first 75-basis point rate hike, saying she thought a half-point was more appropriate. In July she joined her fellow policymakers in what was a unanimous decision for a second 75 basis-point hike.

(Source: Reuters)