November 28, 2017 / 7:11 PM / a year ago

Three regional Fed banks favoured hiking discount rate in October: minutes

The seal for the Board of Governors of the Federal Reserve System is displayed in Washington, U.S., June 14, 2017. REUTERS/Joshua Roberts

WASHINGTON (Reuters) - Three out of 12 regional Federal Reserve banks wanted an increase in the rate commercial banks are charged for emergency loans ahead of the U.S central bank’s last policy meeting, minutes from a discussion of the discount rate showed on Tuesday.

The U.S. central bank subsequently kept its benchmark lending rate unchanged at its Oct 31 - Nov 1 meeting and the discount rate at 1-3/4 percent.

The Federal Reserve Banks of Kansas City, Cleveland and Richmond in October had urged the Fed’s board to raise the discount rate to 2 percent, the minutes showed. Kansas City had also urged such action in September.

Directors at those banks felt an increase was warranted “in light of solid economic growth, already tight labour markets, and an expected rise in inflation toward 2 percent.”

Those who wanted to maintain the current level by contrast cited weak readings on inflation this year. The Fed is widely expected to raise interest rates at its next policy meeting in December.

Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci

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