[Federal Register Volume 69, Number 158 (Tuesday, August 17, 2004)]
[Rules and Regulations]
[Pages 51001-51002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18754]


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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 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.

DATES: 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.

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 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 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:

[[Page 51002]]

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

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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.

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2. In Sec.  201.51, paragraphs (a) and (b) are revised 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................................    2.50  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.
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    (b) Secondary credit. The interest rates for secondary credit 
provided to depository institutions under 201.4(b) are:

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         Federal Reserve Bank            Rate           Effective
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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.
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* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, August 11, 2004.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 04-18754 Filed 8-16-04; 8:45 am]
BILLING CODE 6210-02-P