Tags: Fed | Directors | Economic | Growth

Fed Directors Saw ‘Moderate or Flat’ Economic Growth Last Month

Tuesday, 18 Oct 2011 02:37 PM

Most directors at the Federal Reserve’s regional banks saw the economy growing moderately or not at all last month, according to minutes of Board of Governors’ meetings in September.

The directors of the 12 banks “remained cautious about the prospects for economic growth in light of generally weak incoming data on employment and production,” according to the minutes released in Washington today, which summarize discussions at the regional banks. “Most directors described overall economic activity as moderate or flat, and many saw the outlook as unusually uncertain.”

The minutes covered three meetings in August and September to discuss the Fed’s discount rate, which it charges on emergency loans to banks. On Oct. 12, banks were borrowing $70 million in primary credit from the Fed’s discount window.

A separate set of minutes for the Federal Open Market Committee’s Sept. 20-21 discussion about monetary policy were released last week. The FOMC next meets in Washington on Nov. 1- 2.

“Several directors cited heightened caution and restraint by consumers and businesses as a result of recent volatility in stock prices, continued uncertainty about European and U.S. fiscal matters, and concern about general economic conditions,” the minutes said. “Directors also noted the ongoing drag on the economy from sluggish employment growth and the still-depressed housing sector.”

Rate Recommendations

Recommendations about changing the discount rate, which has been at 0.75 percent since February 2010, were the same as in previous meetings at 11 of the Fed’s 12 banks. Ten banks have preferred no change while the Kansas City Fed recommended raising the rate to 1 percent.2

At the Aug. 22 and Sept. 6 meetings, the Dallas Fed recommended leaving the rate unchanged. It requested an increase at the Sept. 19 meeting.

Aside from Dallas, the other banks have not changed their recommendation on the rate since at least June 2010. The Fed’s Washington-based Board of Governors expressed “no sentiment” for a change and kept it at 0.75 percent last month.

Discount-rate changes are requested by boards of directors at the 12 regional Fed banks. The requests are subject to final review and determination by the Fed Board, which consists of the central bank’s five Washington-based governors. They review requests about every two weeks.

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Most directors at the Federal Reserve s regional banks saw the economy growing moderately or not at all last month, according to minutes of Board of Governors meetings in September.The directors of the 12 banks remained cautious about the prospects for economic growth in...
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Tuesday, 18 Oct 2011 02:37 PM
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