–State’s Fiscal Problems and European Troubles Catch Attention
WASHINGTON (MNI) – The latest minutes of the Federal Reserve
Board’s consideration of discount rate requests from regional banks
showed Dallas, St. Louis and Kansas City favored a quarter-point
increase to 1%.
The minutes, covering the May 24 through June 21 period, showed the
Board on June 7 considered the views of Bank directors that “suggested a
moderate economic recovery was continuing.”
An unspecified “number” of the directors noted that consumer
spending had increases “albeit from low levels. There were observations
that the labor market “showed signs of gradual improvement” yet
“directors were cautious about the outlook,” the minutes said.
“Directors generally expected hiring to remain subdued,” and there
were also concerns expressed about “downside risks posed by the fiscal
condition of state and local governments and by financial developments
abroad.”
As a result “most directors recommended that the current
accommodative stance of monetary policy be maintained” although “some”
favored restoring “a pre-crisis discount rate structure” with a quarter
point hike, resulting in a more typical 75-basis point spread between
the primary credit rate and the upper end of the FOMC’s target rate.
But at the June 7 meeting, “no sentiment was expressed” among Board
members for a discount rate hike “and the existing rate was maintained.”
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: M$$CR$,M$U$$$,MMUFE$,MGU$$$,MFU$$$]
