[Federal Register Volume 68, Number 132 (Thursday, July 10, 2003)]
[Rules and Regulations]
[Pages 41054-41055]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-17383]



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FEDERAL RESERVE SYSTEM

12 CFR Part 201

[Regulation A]


Extensions of Credit by Federal Reserve Banks

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: 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 a decrease in the primary credit rate at each Federal 
Reserve Bank. The secondary credit rate at each Reserve Bank 
automatically decreased by formula as a result of the Board's primary 
credit rate action.
    In addition, the Board is inserting a footnote to Sec.  201.51 
clarifying that the rates described in that section apply to both 
advances and discounts made under the primary, secondary, and seasonal 
credit programs. The Board's amendments also correct a typographical 
error in Sec.  201.51(c).

DATES: The amendments to part 201 (Regulation A) are effective July 10, 
2003. The rate changes for primary and secondary credit were effective 
on the dates specified in 12 CFR 201.51, as amended.

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.

SUPPLEMENTARY 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 decrease by 25 
basis points the primary credit rate in effect at each of the twelve 
Federal Reserve Banks, thereby lowering from 2.25 percent to 2 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 decreased from 2.75 percent to 2.50 percent under 
the secondary credit rate formula. The final amendments to Regulation A 
reflect these rate changes.
    The 25-basis-point decrease in the primary credit rate was 
associated with a similar decrease in the target for the federal funds 
rate (from 1.25 percent to 1 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 continues to believe that an accommodative stance of 
monetary policy, coupled with still robust underlying growth in 
productivity, is providing important ongoing support to economic 
activity. Recent signs point to a firming in spending, markedly 
improved financial conditions, and labor and product markets that 
are stabilizing. The economy, nonetheless, has yet to exhibit 
sustainable growth. With inflationary expectations subdued, the 
Committee judged that a slightly more expansive monetary policy 
would add further support for an economy which it expects to improve 
over time.

    In addition to amending the primary and secondary credit rates 
listed in Sec.  201.51 of Regulation A, the Board has added a footnote 
to Sec.  201.51 to clarify that the rates described in that section 
apply to both advances and discounts made under the primary, secondary, 
and seasonal credit programs. The Board uses the unqualified term 
``discount rate'' to refer to the primary credit rate.
    The Board's amendments to Regulation A also correct the cross-
reference to the secondary credit program in Sec.  201.51(c). The 
current regulation refers to Sec.  201.4(b) when it should refer to 
Sec.  201.4(c).

Regulatory Flexibility Act Certification

    Pursuant to section 605(b) of 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 significant 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. The insertion of the footnote and correction of the cross-
reference also should not adversely affect small entities because they 
merely clarify the application of Sec.  201.51.

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, 
the explanatory footnote, and the cross-reference correction 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 II

List of Subjects in 12 CFR Part 201

    Banks, Banking, Federal Reserve System, Reporting and 
recordkeeping.

Authority and Issuance

0
For the reasons set forth in the preamble, the Board is amending 12 CFR 
Chapter II to read as follows:

PART 201--EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION 
A)

0
1. The authority citation for part 201 continues to read as follows:

    Authority: 12 U.S.C. 248(i)-(j), 343 et seq., 347a, 347b, 347c, 
348 et seq., 357, 374, 374a, and 461.


0
2. Section 201.51 is amended by revising paragraphs (a), (b), and (c) 
to read as follows:


Sec.  201.51  Interest rates applicable to credit extended by a Federal 
Reserve Bank.\1\
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    \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.
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    (a) Primary credit. The interest rates for primary credit provided 
to depository institutions under Sec.  201.4(a) are:

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        Federal Reserve Bank           Rate           Effective
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Boston..............................   2.00  June 25, 2003.
New York............................   2.00  June 25, 2003.
Philadelphia........................   2.00  June 26, 2003.
Cleveland...........................   2.00  June 26, 2003.
Richmond............................   2.00  June 26, 2003.
Atlanta.............................   2.00  June 26, 2003.
Chicago.............................   2.00  June 26, 2003.
St. Louis...........................   2.00  June 26, 2003.
Minneapolis.........................   2.00  June 26, 2003.
Kansas City.........................   2.00  June 25, 2003.
Dallas..............................   2.00  June 26, 2003.
San Francisco.......................   2.00  June 25, 2003.
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    (b) Secondary credit. The interest rates for secondary credit 
provided to depository institutions under 201.4(b) are:

------------------------------------------------------------------------
        Federal Reserve Bank           Rate           Effective
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Boston..............................   2.50  June 25, 2003.

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New York............................   2.50  June 25, 2003.
Philadelphia........................   2.50  June 26, 2003.
Cleveland...........................   2.50  June 26, 2003.
Richmond............................   2.50  June 26, 2003.
Atlanta.............................   2.50  June 26, 2003.
Chicago.............................   2.50  June 26, 2003.
St. Louis...........................   2.50  June 26, 2003.
Minneapolis.........................   2.50  June 26, 2003.
Kansas City.........................   2.50  June 25, 2003.
Dallas..............................   2.50  June 26, 2003.
San Francisco.......................   2.50  June 25, 2003.
------------------------------------------------------------------------

    (c) Seasonal credit. The rate for seasonal credit extended to 
depository institutions under Sec.  201.4(c) is a flexible rate that 
takes into account rates on market sources of funds.
* * * * *
    By order of the Board of Governors of the Federal Reserve 
System, July 3, 2003.

Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 03-17383 Filed 7-9-03; 8:45 am]
BILLING CODE 6210-02-P