(Reuters) -The boards 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.
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.
Fed bank directors are not policymakers and their votes on discount-rate-setting do not determine the Fed’s benchmark rate. However, they do meet regularly with their respective Fed bank presidents, who along with Fed Chair Jerome Powell and the Fed Board make the actual policy rate decision.
Still, Fed presidents say their boards’ views help shape their own outlooks.
Minneapolis Fed President Neel Kashkari and St. Louis Fed President James Bullard are the Fed’s two most hawkish rate-setters https://graphics.reuters.com/USA-ECONOMY/FED/lgpdwawwzvo/, 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.
(Reporting by Ann Saphir; Editing by Paul Simao and Richard Chang)
