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FEDERAL RESERVE BANK OF NEW YORK Circular No. 10741 November 15, 1994 DISCOUNT RATE T o A ll D e p o s ito r y I n s titu tio 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 : T h e directors o f th is B ank, w ith the approval o f the Board o f G overn ors o f the Federal R eserv e S y stem , have increased the B a n k ’s b asic d isco u n t rate to 4 -3 /4 percent from 4 percent, e ffe c tiv e im m ed ia tely . In that regard, the Board o f G overnors issu ed the fo llo w in g statem ent. T h e F e d e r a l R e s e r v e B o a r d t o d a y a p p r o v e d an in c r e a s e in th e d is c o u n t r a te fr o m 4 p e r c e n t to 4 - 3 / 4 p e r c e n t, e f f e c t i v e im m e d ia t e ly . In a r e la te d m o v e , th e F e d e r a l O p e n M a r k e t C o m m it t e e d e c id e d th a t th e in c r e a s e in t h e d is c o u n t rate s h o u ld b e r e f le c t e d f u l l y in in te r e s t r a te s in r e s e r v e m a r k e ts . T h e s e m e a s u r e s w e r e ta k e n a g a in s t t h e b a c k g r o u n d o f e v id e n c e o f p e r s is te n t s tr e n g th in e c o n o m ic a c t iv it y a n d h ig h a n d r is in g l e v e l s o f r e s o u r c e u t iliz a t io n . In t h e s e c ir c u m s t a n c e s , th e F e d e r a l R e s e r v e v i e w s t h e s e a c t io n s a s n e c e s s a r y to k e e p in f la t io n c o n t a in e d , a n d th e r e b y f o s t e r s u s t a in a b le e c o n o m ic g r o w t h . In t a k in g th e d is c o u n t ra te a c t io n , th e B o a r d a p p r o v e d r e q u e s ts s u b m it t e d b y th e B o a r d s o f D ir e c t o r s o f th e F e d e r a l R e s e r v e B a n k s o f N e w Y o r k , S t. L o u is , a n d K a n s a s C it y . T h e d is c o u n t rate is th e in te r e s t rate th a t is c h a r g e d d e p o s it o r y i n s t it u t io n s w h e n t h e y b o r r o w fr o m th e ir d is tr ic t F e d e r a l R e s e r v e B a n k s . T h is B a n k ’s O perating C ircular N o . 13, regarding d isco u n t rates, will be revised a cco rd in g ly . W il l ia m J. M c D o n o u g h , President. c Federal Reserve Bank of New York m-\o~nn r O p era tin g C ircu la r N o. 13 I Revised effective November 15,1994 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 o f the Federal Reserve Act from 4 percent per annum to 4 3/ 4 percent per annum, effective November 15, 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 August 16, 1994. W il l ia m J. M c D o n o u g h , P r e s id e n t. © [R ef. Cir. N o. 1 0 741] A (O V E R ) Rates Effective November 15, 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 43A 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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