In July it was 5, then in October the number rose to 8, and moments ago we learned that during the meetings on October 15 and 22, a total of nine regional Feds had asked to increase the Fed's discount rate from 0.75% to 1.00%, with Boston joining the St. Louis, Atlanta, San Francisco Fed, Cleveland, Dallas, Philadelphia, Kansas City and Richmond Fed. Two banks, the Chicago and NY Fed wanted to keep rates at 0.75%, while the domain of Fed's uber dove Kocherlakota, the Minneapolis Fed where former Goldmanite Neel Kashkari will soon operate, asked for a Discount Rate cut to 0.50%.
According to the minutes, the Fed Directors requesting an increase in the primary credit rate (to 1 percent) viewed a move toward a
more normal level as appropriate in light of the improvements in labor market conditions this year and their expectations for inflation to rise gradually toward the Federal Reserve's 2 percent objective. Some directors favoring an increase judged that an earlier start to the policy normalization process could allow for a more gradual pace of adjustment, thereby limiting the associated risks.
As a reminder, the Board’s meeting to review discount-rate requests took place on Oct. 26, two days before the Federal Open Market Committee decided to hold the federal funds rate target in a range of zero to 0.25%.
However, even as the regional Fed hawks were soaring, the discount-rate minutes said that "no sentiment was expressed for changing the primary credit rate before the Committee’s meeting, and the existing rate was maintained" among the Fed Board.
And before one is convinced that the hawks are flying in the Marriner Eccles building again, it is worth recalling the regonal Feds are largely irrelevant at the Fed where what matters is what former Goldmanite Bill Dudley, head of the NY Fed, and of course Janet Yellen want.
Finally, there was no disclosure about what was covered during the Fed's emergency meeting which took place yesterday as we first covered last week, where setting of discount rates was the publicly disclosed topic of conversation.
Full minutes here.