Extension of Credit by Federal Reserve Banks
July 13, 2004
Circular No. 11622

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 percent to 2.25 percent. The secondary credit rate at each Reserve Bank automatically increased (from 2.50 percent to 2.75 percent) by formula as a result of the Board’s primary credit rate action. The amendments to Regulation A became effective June 30, 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. The primary and secondary credit rates are the interest rates the 12 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 percent to 1.25 percent) approved by the Federal Open Market Committee.

Federal Register notice OFFSITE PDF

William A. Walsh
Markets Officer