Directors at the Federal Reserve’s regional banks saw a pickup in the pace of economic growth last month as housing, motor vehicle sales and consumer spending gained strength.
“Directors noted further improvement in economic activity, and they anticipated growth would continue at a moderate pace,” according to minutes released today in Washington summarizing discussions of meetings in April.
Board members of the 12 banks “saw the incoming data on consumer spending as a bit more robust than they had expected but cautioned that these gains might be attributable to unseasonably warm winter weather,” the minutes said.
The minutes covered meetings on April 2 and April 23 by the Fed’s Board of Governors to discuss the discount rate, which the central bank charges on emergency loans to banks. The Fed kept the rate unchanged at 0.75 percent. A different Fed panel, the Federal Open Market Committee, met April 24-25 and affirmed a plan to hold interest rates near zero at least through late 2014 to spur growth and reduce unemployment.
The minutes of the FOMC meeting in April were released last week. Policy makers next gather in Washington on June 19-20.
Many of the directors of the Fed’s regional banks, who are mostly bankers and business executives, “cited downside risks that included still significant strains in global financial markets and ongoing domestic fiscal uncertainty,” according to the minutes.
Directors “reported strong performance in sectors related to agriculture and motor vehicles” and some directors “noted improvement, albeit gradual and from low levels, in the housing sector,” according to the minutes.
Recommendations about changing the discount rate, which has been at 0.75 percent since February 2010, were the same as in meetings since December. Members of the Boston Fed’s board of directors urged a quarter-percentage point discount-rate reduction, to 0.5 percent, while the Kansas City Fed repeated its request for a quarter-point rise. The other 10 banks did not request a change.
Each of the Fed’s 12 regional banks has a nine-member board of directors that requests discount-rate changes. 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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