Two Fed banks wanted rate hike in June

By Rex Nutting, MarketWatch
Last update: 2:12 p.m. EDT July 22, 2008 Comments: 3

WASHINGTON (MarketWatch) -- Directors at two of the 12 Federal Reserve banks asked for -- but didn't get -- an increase in interest rates in June to fight inflation, according to a summary of Fed board meetings released Tuesday.

On June 23, the boards of the Fed banks in Kansas City and Dallas asked the Fed to raise the discount rate (also known as the primary credit rate) from 2.25% to 2.50%. The Fed board did not act on those requests.

Two days later, the larger Federal Open Market Committee voted to keep the federal funds target rate steady at 2%.

The regional bank directors who wanted rate hikes "favored reversing some of the monetary policy easing that had been implemented in recent months," arguing that downside risks to the economy "were outweighed by the upside risk of inflation," the truncated minutes said.

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