[Federal Register Volume 70, Number 187 (Wednesday, September 28, 2005)]
[Rules and Regulations]
[Pages 56563-56564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-19395]


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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 
September 28, 2005. 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 4.50 percent to 4.75 
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 5.00 percent to 5.25 
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 3.50 percent to 3.75 percent) approved by the Federal Open 
Market Committee (Committee) and announced at the same time. A press 
release announcing these actions indicated that:

    Output appeared poised to continue growing at a good pace before 
the tragic toll of Hurricane Katrina. The widespread devastation in 
the Gulf region, the associated dislocation of economic activity, 
and the boost to energy prices imply that spending, production, and 
employment will be set back in the near term. In addition to 
elevating premiums for some energy products, the disruption to the 
production and refining infrastructure may add to energy price 
volatility.
    While these unfortunate developments have increased uncertainty 
about near-term economic performance, it is the Committee's view 
that they do not pose a more persistent threat. Rather, monetary 
policy accommodation, coupled with robust underlying growth in 
productivity, is providing ongoing support to economic activity. 
Higher energy and other costs have the potential to add to inflation 
pressures. However, core inflation has been relatively low in recent 
months and longer-term inflation expectations remain contained.
    The Committee perceives that, with appropriate monetary policy 
action, the upside and downside risks to the attainment of both 
sustainable growth and price stability should be kept roughly equal. 
With underlying inflation expected to be contained, 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.

[[Page 56564]]

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).

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 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. 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................................   4.75  September 20, 2005.
New York..............................   4.75  September 20, 2005.
Philadelphia..........................   4.75  September 20, 2005.
Cleveland.............................   4.75  September 22, 2005.
Richmond..............................   4.75  September 20, 2005.
Atlanta...............................   4.75  September 22, 2005.
Chicago...............................   4.75  September 20, 2005.
St. Louis.............................   4.75  September 21, 2005.
Minneapolis...........................   4.75  September 20, 2005.
Kansas City...........................   4.75  September 20, 2005.
Dallas................................   4.75  September 22, 2005.
San Francisco.........................   4.75  September 20, 2005.
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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................................   5.25  September 20, 2005.
New York..............................   5.25  September 20, 2005.
Philadelphia..........................   5.25  September 20, 2005.
Cleveland.............................   5.25  September 22, 2005.
Richmond..............................   5.25  September 20, 2005.
Atlanta...............................   5.25  September 22, 2005.
Chicago...............................   5.25  September 20, 2005.
St. Louis.............................   5.25  September 21, 2005.
Minneapolis...........................   5.25  September 20, 2005.
Kansas City...........................   5.25  September 20, 2005.
Dallas................................   5.25  September 22, 2005.
San Francisco.........................   5.25  September 20, 2005.
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* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, September 22, 2005.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 05-19395 Filed 9-27-05; 8:45 am]
BILLING CODE 6210-01-P