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Cleveland and Richmond Feds alone in wanting discount rate increase: minutes

WASHINGTON (Reuters) - Only two out of 12 regional Federal Reserve banks wanted an increase in the rate commercial banks are charged for emergency loans ahead of the U.S central bank's last policy meeting, minutes from a discussion of the discount rate showed on Tuesday.

Both the Federal Reserve Banks of Cleveland and Richmond urged the Fed's board to raise the discount rate to 1-1/2 percent from 1-1/4 percent ahead of its Jan. 31-Feb. 1 meeting, the minutes showed.

Directors at those two banks cited economic strength and signs of firming inflation.

However, others wanted to stand pat and according to the minutes "many directors pointed to an elevated level of uncertainty about potential fiscal and other government policies and their likely effect on the economy."

The Fed raised its discount rate and wider benchmark interest rate for only the second time in two years at its December meeting when all but one of the regional banks called for an increase in the discount rate.

Policymakers have only met once since then to decide the course of interest rates, but meet again in two weeks time. They have yet to raise either interest rate again, although the Fed has forecast three rate hikes this year.

(Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci)