Fed discount rate minutes: 9 of 12 Fed bank boards sought 75 BP discount rate rise in Sept | Forexlive

• 9 of 12 Fed backboards sought 75 basis point discount rate rise in September
• The Federal Reserve raised the discount rate to 3.25%
• Minneapolis Fed sought 100 basis point rise to 3.5%
• The New York and San Francisco Federal Reserve banks voted for a 3% discount rate

The current discount rate is at 3.25%. The discount rate represents the rate that member banks are charged at the Federal Reserve discount window should there reserves fall below the reserve requirement at the end of the 2-week maintenance period.

The Federal Reserve is the lender of last resort. Banks have an obligation to keep a minimum reserve requirement at the Federal Reserve Bank given their balance sheet. They manage there reserves primarily through dealing with other banks in the open market.

If a bank or banks are unable to meet that reserve requirement, they would need to petition the Fed reserve at the discount window for additional funds.

In times of financial stress, a bank may have difficult borrowing from other banks as those banks are reluctant to lend for fear of a default. As a result, the troubled institution may be forced to borrow at the Fed.