Minutes of the Board’s discount rate meetings on August 17, September 9, and September 16, 2026

The Federal Reserve Board has released the minutes from its recent meetings to review and determine the discount rates provided to depository institutions through the discount window. The minutes cover the Board meetings that occurred on August 17, September 9, and September 16, 2026. The Board’s process for setting the discount rate is distinct from the process the Federal Open Market Committee follows in setting the target range for the federal funds rate.

Key Meeting Summaries

1. August 17, 2026 Meeting

• Rate Requests: Ten Reserve Banks requested to maintain the existing primary credit rate at 3.75%, while two Reserve Banks (Kansas City and Cleveland) voted to increase it to 4%.
• Board Action: The Board expressed no sentiment for changing the rate at this time and approved keeping the primary credit rate at 3.75%.
• Credit Formulas: The existing formulas for secondary and seasonal credit rates were renewed (secondary credit set 50 basis points above primary credit; seasonal credit reset bi-weekly based on the average daily effective federal funds rate and 3-month CD rates).
• Vote: Approved unanimously by the participating Board members, with Vice Chair Jefferson absent.

2. September 9, 2026 Meeting

• Economic Conditions: Directors reported stable economic and labor market conditions with moderate wage pressures. However, persistent hiring difficulties and elevated wages were noted for certain skilled positions—particularly those related to artificial intelligence (AI) strategies and data center construction.
• Input Costs: Most directors observed upward cost pressures stemming from oil/fuel prices, tariffs, rising healthcare expenses, and resource competition driven by the AI buildout.
• Rate Requests & Action: Eight Reserve Banks favored keeping the primary credit rate at 3.75%, while four (Cleveland, Chicago, Minneapolis, and Kansas City) voted for 4%. The Board took no action to change the rate, maintaining it at 3.75% alongside the renewal of secondary and seasonal formulas.
• Vote: Approved by attending members; Governors Waller and Cook were absent.

3. September 16, 2026 Joint Meeting (Board and FOMC)

• FOMC Policy Decision: The Federal Open Market Committee (FOMC) decided to raise the target range for the federal funds rate by 25 basis points to $3-3/4$ to 4 percent, effective September 17, 2026.
• Monetary Policy Implementation:
  • The interest rate paid on reserve balances was increased from 3.65% to 3.9%.
  • The primary credit rate was approved for an increase from 3.75% to 4%, effective September 17, 2026, following requests from multiple Reserve Banks.
• Vote: Approved unanimously by all participating members.