Eight Fed banks call for discount rate hike: minutes

WASHINGTON (Reuters) - The number of Federal Reserve banks pushing the central bank to raise the rate it charges commercial banks for emergency loans rose to eight in September from five in July, minutes from the Fed's discount rate meeting showed.

Ahead of the Fed's September 16-17 policy-setting meeting, directors of the St. Louis, Atlanta and San Francisco Fed banks joined Cleveland, Dallas, Philadelphia, Kansas City and Richmond in asking the Fed's board to increase the discount rate to 1 percent from 0.75 percent, according to the minutes, which were released on Tuesday.

The board opted to hold the rate steady, a stance that was backed by three other regional Fed banks. The Minneapolis Fed again voted to cut the rate to 0.5 percent.

The eight regional banks that requested a hike want to normalize the spread between the discount rate governing Fed lending to banks and the overnight federal funds rate, which is the central bank's primary economic lever.

The Fed also released minutes from its August meeting, which showed five regional banks in favor of hiking the discount rate, as was the case in July.

Minutes from the September meeting showed that the directors were optimistic about the U.S economy but expressed uncertainty on the likely impact of international economic and financial developments.

Those that wanted to raise the discount rate saw it as "appropriate in light of improvements in economic and labor market conditions," the minutes said.

(Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci)