MNI BRIEF: Fed Banks Divided On Discount Rate Hike Before SVB

The boards of directors of six Federal Reserve banks voted in February for a pause in hikes in the discount rate charged to banks for emergency loans, according to the latest discount rate meeting minutes published Tuesday, but the directors of all 12 banks voted for an increase in March.

Directors at the Fed banks in Boston, Atlanta, San Francisco, Richmond, Chicago, and Dallas voted in February to keep the discount rate steady at 4.75%. 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 banks.

After the SVB collapse, officials unanimously voted for a 25-basis-point increase, and the Fed Board approved an increase in the primary credit rate from 4.75% to 5%, according to the minutes. The FOMC hiked the fed funds rate range by 25 bps in March to 4.75% to 5%. (See: MNI INTERVIEW: Fed Close To Done As Credit Tightens–Kroszner)