The Federal Reserve Bank of Kansas City, like the other 11 Reserve Banks, has a research staff that keeps in touch with current developments in the economy throughout its district. As a result, the Bank is able to report to the Federal Reserve Board of Governors, other Federal Reserve Banks, and the public on current conditions in this area. But, most importantly, this information is reported to the Federal Open Market Committee (FOMC), which meets eight times a year in Washington, D.C.

The FOMC is made up of the seven members of the Board of Governors and the presidents of the Federal Reserve Banks. (The New York Fed president is always a voting member because open market operations are carried out at that Reserve Bank, but the other 11 presidents are "voting members" on a rotating basis.) A total of 12 governors and presidents are the only ones who can vote on actions to expand or contract the supply of money to the economy. However, all Reserve Bank presidents participate in each meeting and each president has the responsibility to discuss district economic conditions.

The Federal Reserve can also influence the economy by raising or lowering the interest rates charged financial institutions when they borrow from the Fed, and by changing reserve requirements. The Kansas City Fed has an important role in each of these areas. Institutions that borrow from the Kansas City Fed pay the discount rate on adjustment credit and a market-based rate on seasonal credit. The Kansas City Fed's board of directors is responsible for setting these rates periodically. Directors' actions to change these rates must be approved by the Board of Governors in Washington, D.C.

Federal Reserve credit, commonly referred to as borrowing from the " Discount Window," is available to depository institutions that maintain reservable transaction accounts or nonpersonal time deposits. When an institution in the Tenth District needs to borrow from the Federal Reserve, it contacts our credit staff. Credit staff consider the loan request based on several criteria before the loan is approved. First, an institution will need to have a completed set of legal documents on file with the Fed prior to any borrowing. Next, credit staff will determine the correct credit type for the institution. Primary credit is advanced at an above-market rate and is available to generally sound institutions as a short-term (usually overnight), back-up source of liquidity. Seasonal credit is available for longer-terms to small institutions that experience cyclical fluctuations in their deposits and loans. Typically, agricultural banks or banks located in resort communities, may experience seasonal fluctuations. The seasonal credit interest rate is a floating market rate. Finally, the institution will need to pledge sufficient acceptable collateral to the Fed to cover the amount of any loan request.

Almost all depository institutions are required to hold reserves with the Federal Reserve. While the Board of Governors sets reserve requirements, the Kansas City Fed makes sure financial institutions in the Tenth District are holding the needed amount of reserves, monitoring them closely.