Board of Governors of the Federal Reserve System.
The Board of Governors of the Federal Reserve System (Board) has adopted final amendments to its Regulation A to reflect the Board's approval of an increase in the primary credit rate at each Federal Reserve Bank. The secondary credit rate at each Reserve Bank automatically increased by formula as a result of the Board's primary credit rate action.
The amendments to part 201 (Regulation A) are effective August 17, 2004. The rate changes for primary and secondary credit were effective on the dates specified in 12 CFR 201.51, as amended.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Jennifer J. Johnson, Secretary of the Board (202/452-3259); for users of Telecommunication Devices for the Deaf (TDD) only, contact 202/263-4869.End Further Info End Preamble Start Supplemental Information
The Federal Reserve Banks make primary and secondary credit available to depository institutions as a backup source of funding on a short-term basis, usually overnight. The primary and secondary credit rates are the interest rates that the twelve Federal Reserve Banks charge for extensions of credit under these programs. In accordance with the Federal Reserve Act, the primary and secondary credit rates are established by the boards of directors of the Federal Reserve Banks, subject to the review and determination of the Board.
The Board approved requests by the Reserve Banks to increase by 25 basis points the primary credit rate in effect at each of the twelve Federal Reserve Banks, thereby increasing from 2.25 percent to 2.50 percent the rate that each Reserve Bank charges for extensions of primary credit. As a result of the Board's action on the primary credit rate, the rate that each Reserve Bank charges for extensions of secondary credit automatically increased from 2.75 percent to 3.00 percent under the secondary credit rate formula. The final amendments to Regulation A reflect these rate changes.
The 25-basis-point increase in the primary credit rate was associated with a similar increase in the target for the federal funds rate (from 1.25 percent to 1.50 percent) approved by the Federal Open Market Committee (Committee) and announced at the same time. A press release announcing these actions indicated that:
The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. In recent months, output growth has moderated and the pace of improvement in labor market conditions has slowed. This softness likely owes importantly to the substantial rise in energy prices. The economy nevertheless appears poised to resume a stronger pace of expansion going forward. Inflation has been somewhat elevated this year, though a portion of the rise in prices seems to reflect transitory factors.
The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters are roughly equal. With underlying inflation still expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.
Regulatory Flexibility Act Certification
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)), the Board certifies that the new primary and secondary credit rates will not have a significantly adverse economic impact on a substantial number of small entities because the final rule does not impose any additional requirements on entities affected by the regulation.
Administrative Procedure Act
The Board did not follow the provisions of 5 U.S.C. 553(b) relating to notice and public participation in connection with the adoption of these amendments because the Board for good cause determined that delaying implementation of the new primary and secondary credit rates in order to allow notice and public comment would be unnecessary and contrary to the public interest in fostering price stability and sustainable economic growth. For these same reasons, the Board also has not provided 30 days prior notice of the effective date of the rule under section 553(d).
12 CFR Chapter IIStart List of Subjects
List of Subjects in 12 CFR Part 201End List of Subjects
Authority and IssuanceStart Amendment Part
For the reasons set forth in the preamble, the Board is amending 12 CFR Chapter II to read as follows:End Amendment Part Start Part Start Printed Page 51002
PART 201—EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION A)End Part Start Amendment Part
1. The authority citation for part 201 continues to read as follows:End Amendment Part Start Amendment Part
2. In § 201.51, paragraphs (a) and (b) are revised to read as follows:End Amendment Part
(a) Primary credit. The interest rates for primary credit provided to depository institutions under § 201.4(a) are:
|Federal Reserve Bank||Rate||Effective|
|Boston||2.50||Aug. 10, 2004.|
|New York||2.50||Aug. 10, 2004.|
|Philadelphia||2.50||Aug. 10, 2004.|
|Cleveland||2.50||Aug. 10, 2004.|
|Richmond||2.50||Aug. 10, 2004.|
|Atlanta||2.50||Aug. 10, 2004.|
|Chicago||2.50||Aug. 10, 2004.|
|St. Louis||2.50||Aug. 11, 2004.|
|Minneapolis||2.50||Aug. 10, 2004.|
|Kansas City||2.50||Aug. 10, 2004.|
|Dallas||2.50||Aug. 10, 2004.|
|San Francisco||2.50||Aug. 10, 2004.|
(b) Secondary credit. The interest rates for secondary credit provided to depository institutions under 201.4(b) are:
|Federal Reserve Bank||Rate||Effective|
|Boston||3.00||Aug. 10, 2004.|
|New York||3.00||Aug. 10, 2004.|
|Philadelphia||3.00||Aug. 10, 2004.|
|Cleveland||3.00||Aug. 10, 2004.|
|Richmond||3.00||Aug. 10, 2004.|
|Atlanta||3.00||Aug. 10, 2004.|
|Chicago||3.00||Aug. 10, 2004.|
|St. Louis||3.00||Aug. 11, 2004.|
|Minneapolis||3.00||Aug. 10, 2004.|
|Kansas City||3.00||Aug. 10, 2004.|
|Dallas||3.00||Aug. 10, 2004.|
|San Francisco||3.00||Aug. 10, 2004.|
By order of the Board of Governors of the Federal Reserve System, August 11, 2004.
Jennifer J. Johnson,
Secretary of the Board.
1. The primary, secondary, and seasonal credit rates described in this section apply to both advances and discounts made under the primary, secondary, and seasonal credit programs, respectively.Back to Citation
[FR Doc. 04-18754 Filed 8-16-04; 8:45 am]
BILLING CODE 6210-02-P