You’re about to bombarded with plenty of talk about whether hiking the discount rate is meaningful. Here’s one compelling argument that it’s a total smokescreen, and a way for Bernanke to look hawkish without actually doing anything. The gist is that since banks aren’t borrowing directly from the Fed right now it doesn’t matter.
That’s fine, but perception is a huge game when it comes to the Fed, especially this Fed, which remains in a straightjacket in terms of what it can really do without hurting the economy and causing a painful dollar spike.
But here’s the thing, you don’t have to take our word for it.
The market is slumping after hours, and the dollar is spiking. That means it matters. End of story.
Update: Oh, and here’s gold. Wonder if gold traders think the move is meaningful.
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