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FEDERAL RESERVE BANK OF NEW YORK Circular No. 10728 August 16, 1994 . DISCOUNT RATE To All Depository Institutions in the Second Federal Reserve District: The directors o f this Bank, with the approval o f the Board o f Governors o f the Federal Reserve System, have increased the Bank’s basic discount rate to 4 percent from 3-1/2 percent, effective immediately. In that regard, the Board o f Governors issued the following statement. The Federal Reserve announced today the following monetary policy actions: —The Board of Governors approved an increase in the discount rate from 3-1/2 percent to 4 percent, effective immediately. —The Federal Open Market Committee agreed that this increase would be allowed to show through completely into interest rates in reserve markets. These measures were taken against the background of evidence of continuing strength in the economic expansion and high levels of resource utilization. The actions are intended to keep inflationary pressures contained, and thereby foster sustainable economic growth. The Federal Reserve will continue to monitor economic and financial developments to gauge the appropriate stance of policy. But these actions are expected to be sufficient, at least for a time, to meet the objective of sustained, noninflationary growth. In taking the discount rate action, the Board approved requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Richmond, Kansas City, and Dallas. The discount rate is the interest rate that is charged depository institutions when they borrow from their district Federal Reserve Banks. This Bank’s Operating Circular No. 13, regarding discount rates, will be revised accordingly. W illiam J. M c D onough , President. f p / d f e f Federal Reserve Bank of New York [ O perating Circular No. 13 Revised effective August 16, 1994 ] DISCOUNT RATES To A l l D e p o s i t o r y I n s t i t u t i o n s in th e S e c o n d F e d e r a l R e s e r v e D i s t r i c t : 1. This Bank has increased its basic discount rate under sections 10(b), 13, and 13a of the Federal Reserve Act from 3 1 /2 percent per annum to 4 percent per annum, effective August 16, 1994. Described on the reverse side are the rates now in effect at this Bank on advances and discounts made under the Federal Reserve Act. 2. This circular supersedes our Operating Circular No. 13, re vised effective May 17, 1994. W il l ia m J. M c D o no ug h , President. o [R ef. Cir. N o. 1 0 7 2 8 ] (O V E R ) fi4 tofferf Rates Effective August 16, 1994 Under Sections 10(b), 13, and 13a of the Federal Reserve Act The following rates will be applied to advances and discounts for depository institutions: Adjustment Credit The basic discount rate, currently 4 percent per annum, is usually charged for advances of adjustment credit. In the case of adjustment credit advances determined by this Bank to be unusually large and to arise from a major operating problem at the borrowing institution, including but not limited to a computer outage, this Bank, in its discretion, may charge the highest rate established by this Bank for advances to depository institu tions. Seasonal Credit A flexible rate, no less than the basic discount rate, that takes into ac count rates on market sources of funds will be applied to seasonal credit. This rate will ordinarily change every two weeks, and the changed rate will apply to both new and outstanding advances of this type. The rate may, under certain circumstances, be changed more frequently than every two weeks. Extended Credit The flexible rate plus fifty basis points will be charged for extended credit to institutions under sustained liquidity pressures or for other special circumstances. The current extended credit rate shall apply to any extended credit outstanding for more than thirty days and may be applied, in the Bank’s discretion, at any time extended credit is granted or outstanding. A depository institution may obtain information regarding the current rate by contacting the Loans and Credits Function (Tel. No. 212-720-5394).
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