Three Fed bank boards wanted bigger rate hike in March

Three Fed bank boards wanted bigger rate hike in March
© Reuters. FILE PHOTO: The U.S. Federal Reserve building is pictured in Washington, March 18, 2008. REUTERS/Jason Reed

By Ann Saphir

(Reuters) – The boards of directors at the Cleveland, St. Louis and Minneapolis Federal Reserve banks had wanted a half-point interest-rate hike before the mid-March collapse of two regional U.S. banks, minutes of the Fed’s discount rate meetings showed on Tuesday

Their votes for an increase in the discount rate – what the Fed charges to commercial banks for emergency loans – were taken on March 9, the minutes show. That was a day before federal regulators closed Silicon Valley Bank and, soon after, Signature Bank (OTC:) in moves that jolted markets and raised concerns over the stability of the banking system.

They were in any event overruled on March 22 when Fed policymakers agreed to lift the benchmark rate by a quarter-of-a-percentage point to a target range of 4.75%-5.00%.

Fed bank directors express their views on appropriate interest-rate policy through non-binding and regular votes on the discount rate. They do not vote on monetary policy.

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