To All Depository Institutions and Others Concerned in the Second Federal Reserve District:
The Federal Reserve Board 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 from 2.25 percent to 2.50 percent. The secondary credit rate at each Reserve Bank automatically increased (from 2.75 to 3.00 percent) by formula as a result of the Board’s primary credit rate action. The amendments to Regulation A became effective August 10, 2004.
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 the twelve Federal Reserve Banks charge for extensions of credit under these programs.
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 1.25 percent to 1.50 percent) approved by the Federal Open Market Committee.
William A. Walsh