Could the Fed hike the discount rate? – BBH

By FXStreet FXStreet (Guatemala) – Analysts at Brown Brothers Harriman explained that the Federal Reserve holds a discount rate meeting on Monday.

Key Quotes:

“There is some speculation that the 75 bp discount rate could be lifted. At the September meeting, which is not the same at the FOMC meeting five of the 12 regional Federal Reserve banks voted into favor a raising the discount rate. One favored cutting it.

The economic data has generally strengthened since then. The FOMC statement last month and the subsequent official comments have indicated that most officials appear on board with a December rate hike, barring a shock.

The discount rate is set by each of the regional Federal Reserves subject to the review of the Board of Governors. Despite reference to the discount window, to be clear, the discount rate is not a discount, but premium over the Fed funds rate. And of course, a bank does not got to a window to access the funds.

We have argued, and the Fed’s Vice Chairman Fischer emphasized the point earlier this week, the Fed has done everything to avoid surprising the market with …read more

Source:: FX Street