This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

511 

Vol. 84, No. 21 

Thursday, January 31, 2019 

1 5 U.S.C. 551 et seq. 

2 5 U.S.C. 553(b)(3)(A). 

3 5 U.S.C. 553(d). 

4 5 U.S.C. 553(a)(2) (emphasis added). 

5 5 U.S.C. 603, 604. 

FEDERAL RESERVE SYSTEM 

12 CFR Part 201 

[Docket No. R–1645] 

RIN 7100 AF–34 

Regulation A: Extensions of Credit by 

Federal Reserve Banks 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Final rule. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (‘‘Board’’) has 

adopted final amendments to its 

Regulation A to reflect the Board’s 

approval of an increase in the rate for 

primary credit at each Federal Reserve 

Bank. The secondary credit rate at each 

Reserve Bank automatically increased 

by formula as a result of the Board’s 

primary credit rate action. 

DATES: 

Effective date: The amendments to 

part 201 (Regulation A) are effective 

January 31, 2019. 

Applicability date: The rate changes 

for primary and secondary credit were 

applicable on December 20, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Clinton Chen, Senior Attorney (202/ 

452–3952), or Sophia Allison, Senior 

Special Counsel (202/452–3565), Legal 

Division, or Kristen Payne, Senior 

Financial Institution & Policy Analyst 

(202/452–2872), Division of Monetary 

Affairs; for users of 

Telecommunications Device for the Deaf 

(TDD) only, contact 202/263–4869; 

Board of Governors of the Federal 

Reserve System, 20th and C Streets NW, 

Washington, DC 20551. 

SUPPLEMENTARY INFORMATION: 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 that the twelve Federal Reserve 

Banks charge for extensions of credit 

under these programs. In accordance 

with the Federal Reserve Act, the 

primary and secondary credit rates are 

established by the boards of directors of 

the Federal Reserve Banks, subject to 

the review and determination of the 

Board. 

On December 19, 2018, the Board 

voted to approve a 1⁄4 percentage point 

increase in the primary credit rate in 

effect at each of the twelve Federal 

Reserve Banks, thereby increasing from 

2.75 percent to 3.00 percent the rate that 

each Reserve Bank charges for 

extensions of primary credit. In 

addition, the Board had previously 

approved the renewal of the secondary 

credit rate formula, the primary credit 

rate plus 50 basis points. Under the 

formula, the secondary credit rate in 

effect at each of the twelve Federal 

Reserve Banks increased by 1⁄4

percentage point as a result of the 

Board’s primary credit rate action, 

thereby increasing from 3.25 percent to 

3.50 percent the rate that each Reserve 

Bank charges for extensions of 

secondary credit. The amendments to 

Regulation A reflect these rate changes. 

The 1⁄4 percentage point increase in 

the primary credit rate was associated 

with an increase in the target range for 

the federal funds rate (from a target 

range of 2 to 21⁄4 percent to a target 

range of 21⁄4 to 21⁄2 percent) announced 

by the Federal Open Market Committee 

on December 19, 2018, as described in 

the Board’s amendment of its Regulation 

D published elsewhere in this issue of 

the Federal Register. 

Administrative Procedure Act 

In general, the Administrative 

Procedure Act (‘‘APA’’) 1 imposes three 

principal requirements when an agency 

promulgates legislative rules (rules 

made pursuant to congressionally 

delegated authority): (1) Publication 

with adequate notice of a proposed rule; 

(2) followed by a meaningful 

opportunity for the public to comment 

on the rule’s content; and (3) 

publication of the final rule not less 

than 30 days before its effective date. 

The APA provides that notice and 

comment procedures do not apply if the 

agency for good cause finds them to be 

‘‘unnecessary, impracticable, or contrary 

to the public interest.’’ 2 Section 553(d) 

of the APA also provides that 

publication at least 30 days prior to a 

rule’s effective date is not required for 

(1) a substantive rule which grants or 

recognizes an exemption or relieves a 

restriction; (2) interpretive rules and 

statements of policy; or (3) a rule for 

which the agency finds good cause for 

shortened notice and publishes its 

reasoning with the rule.3 The APA 

further provides that the notice, public 

comment, and delayed effective date 

requirements of 5 U.S.C. 553 do not 

apply ‘‘to the extent that there is 

involved . . . a matter relating to agency 

management or personnel or to public 

property, loans, grants, benefits, or 

contracts.’’ 4

Regulation A establishes the interest 

rates that the twelve Reserve Banks 

charge for extensions of primary credit 

and secondary credit. The Board has 

determined that the notice, public 

comment, and delayed effective date 

requirements of the APA do not apply 

to these final amendments to Regulation 

A for several reasons. The amendments 

involve a matter relating to loans and 

are therefore exempt under the terms of 

the APA. In addition, the Board has 

determined that notice, public 

comment, and delayed effective date 

would be unnecessary and contrary to 

the public interest because delay in 

implementation of changes to the rates 

charged on primary credit and 

secondary credit would permit insured 

depository institutions to profit 

improperly from the difference in the 

current rate and the announced 

increased rate. Finally, because delay 

would undermine the Board’s action in 

responding to economic data and 

conditions, the Board has determined 

that ‘‘good cause’’ exists within the 

meaning of the APA to dispense with 

the notice, public comment, and 

delayed effective date procedures of the 

APA with respect to the final 

amendments to Regulation A. 

Regulatory Flexibility Analysis 

The Regulatory Flexibility Act 

(‘‘RFA’’) does not apply to a rulemaking 

where a general notice of proposed 

rulemaking is not required.5 As noted 

previously, a general notice of proposed 

rulemaking is not required if the final 

rule involves a matter relating to loans. 

Furthermore, the Board has determined 


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512 Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Rules and Regulations 

6 44 U.S.C. 3506; see 5 CFR part 1320, appendix 

A.1. 

3The primary, secondary, and seasonal credit 

rates described in this section apply to both 

advances and discounts made under the primary, 

secondary, and seasonal credit programs, 

respectively. 1 12 U.S.C. 461(b). 

2 12 CFR 204.5(a)(1). 

3 12 U.S.C. 461(b)(1)(A) & (b)(12)(A). 

4See 12 U.S.C. 461(b)(1)(A) & (b)(12)(C); see also 

12 CFR 204.2(y). 

5See 12 U.S.C. 461(b)(12)(B). 

6See 12 CFR 204.10(b)(5). 

that it is unnecessary and contrary to 

the public interest to publish a general 

notice of proposed rulemaking for this 

final rule. Accordingly, the RFA’s 

requirements relating to an initial and 

final regulatory flexibility analysis do 

not apply. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act (‘‘PRA’’) of 1995,6 the 

Board reviewed the final rule under the 

authority delegated to the Board by the 

Office of Management and Budget. The 

final rule contains no requirements 

subject to the PRA. 

12 CFR Chapter II 

List of Subjects in 12 CFR Part 201 

Banks, Banking, Federal Reserve 

System, Reporting and recordkeeping. 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Board is amending 12 

CFR chapter II to read as follows: 

PART 201—EXTENSIONS OF CREDIT 

BY FEDERAL RESERVE BANKS 

(REGULATION A) 

■ 1. The authority citation for part 201 

is revised to read as follows: 

Authority: 12 U.S.C. 248(i)–(j), 343 et seq., 

347a, 347b, 347c, 348 et seq., 357, 374, 374a, 

and 461. 

■ 2. In § 201.51, paragraphs (a) and (b) 

are revised to read as follows: 

§ 201.51 Interest rates applicable to credit 

extended by a Federal Reserve Bank.3

(a) Primary credit. The interest rate at 

each Federal Reserve Bank for primary 

credit provided to depository 

institutions under § 201.4(a) is 3.00 

percent. 

(b) Secondary credit. The interest rate 

at each Federal Reserve Bank for 

secondary credit provided to depository 

institutions under § 201.4(b) is 3.50 

percent. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, December 20, 2018. 

Ann Misback, 

Secretary of the Board. 

[FR Doc. 2018–28423 Filed 1–30–19; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 204 

[Docket No. R–1646] 

RIN 7100–AF35 

Regulation D: Reserve Requirements 

of Depository Institutions 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Final rule. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (‘‘Board’’) is 

amending Regulation D (Reserve 

Requirements of Depository Institutions) 

to revise the rate of interest paid on 

balances maintained to satisfy reserve 

balance requirements (‘‘IORR’’) and the 

rate of interest paid on excess balances 

(‘‘IOER’’) maintained at Federal Reserve 

Banks by or on behalf of eligible 

institutions. The final amendments 

specify that IORR is 2.40 percent and 

IOER is 2.40 percent, a 0.20 percentage 

point increase from their prior levels. 

The amendments are intended to 

enhance the role of such rates of interest 

in moving the Federal funds rate into 

the target range established by the 

Federal Open Market Committee 

(‘‘FOMC’’ or ‘‘Committee’’). 

DATES:

Effective date: The amendments to 

part 204 (Regulation D) are effective 

January 31, 2019. 

Applicability date: The IORR and 

IOER rate changes were applicable on 

December 20, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Clinton Chen, Senior Attorney (202– 

452–3952), or Sophia Allison, Senior 

Special Counsel (202–452–3565), Legal 

Division, or Kristen Payne, Senior 

Financial Institution & Policy Analyst 

(202–452–2872), or Laura Lipscomb, 

Assistant Director (202–912–7964), 

Division of Monetary Affairs; for users 

of Telecommunications Device for the 

Deaf (TDD) only, contact 202–263–4869; 

Board of Governors of the Federal 

Reserve System, 20th and C Streets NW, 

Washington, DC 20551. 

SUPPLEMENTARY INFORMATION: 

I. Statutory and Regulatory Background 

For monetary policy purposes, section 

19 of the Federal Reserve Act (‘‘the 

Act’’) imposes reserve requirements on 

certain types of deposits and other 

liabilities of depository institutions.1

Regulation D, which implements section 

19 of the Act, requires that a depository 

institution meet reserve requirements by 

holding cash in its vault, or if vault cash 

is insufficient, by maintaining a balance 

in an account at a Federal Reserve Bank 

(‘‘Reserve Bank’’).2 Section 19 also 

provides that balances maintained by or 

on behalf of certain institutions in an 

account at a Reserve Bank may receive 

earnings to be paid by the Reserve Bank 

at least once each quarter, at a rate or 

rates not to exceed the general level of 

short-term interest rates.3 Institutions 

that are eligible to receive earnings on 

their balances held at Reserve Banks 

(‘‘eligible institutions’’) include 

depository institutions and certain other 

institutions.4 Section 19 also provides 

that the Board may prescribe regulations 

concerning the payment of earnings on 

balances at a Reserve Bank.5 Prior to 

these amendments, Regulation D 

specified a rate of 2.20 percent for both 

IORR and IOER.6

II. Amendments to IORR and IOER 

The Board is amending § 204.10(b)(5) 

of Regulation D to specify that IORR is 

2.40 percent and IOER is 2.40 percent. 

This 0.20 percentage point increase in 

the IORR and IOER was associated with 

an increase in the target range for the 

federal funds rate, from a target range of 

2 to 21⁄4 percent to a target range of 21⁄4

to 21⁄2 percent, announced by the FOMC 

on December 19, 2018, with an effective 

date of December 20, 2018. The FOMC’s 

press release on the same day as the 

announcement noted that: 

Information received since the Federal 

Open Market Committee met in November 

indicates that the labor market has continued 

to strengthen and that economic activity has 

been rising at a strong rate. Job gains have 

been strong, on average, in recent months, 

and the unemployment rate has remained 

low. Household spending has continued to 

grow strongly, while growth of business fixed 

investment has moderated from its rapid 

pace earlier in the year. On a 12-month basis, 

both overall inflation and inflation for items 

other than food and energy remain near 2 

percent. Indicators of longer-term inflation 

expectations are little changed, on balance. 

Consistent with its statutory mandate, the 

Committee seeks to foster maximum 

employment and price stability. The 

Committee judges that some further gradual 

increases in the target range for the federal 

funds rate will be consistent with sustained 

expansion of economic activity, strong labor 

market conditions, and inflation near the 

Committee’s symmetric 2 percent objective 

over the medium term. The Committee 

judges that risks to the economic outlook are 

roughly balanced, but will continue to 

monitor global economic and financial 


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