If you believe in Fed transparency...

Then the rate hike that has been speculated as having wreaked havoc in the commodities sector and the market this week just got a little credibility, again, if you believe in Fed transparency.


From the Minneapolis Fed's Kocherlakota's speaking engagement today, 


"A core inflation rate of 1.5 percent is still markedly below the Fed's price stability objective of 2 percent. Accordingly, an increase of 50 basis points in the fed funds rate would still leave the Fed in a highly accommodative stance. First, the fed funds rate would be extremely low—between 50 and 75 basis points. "


A 50 basis point hike! This language (and every FOMC statement is compared for even the placement of a comma) is quite a divergence from the recent FOMC's highly accommodative stance for the foreseeable future. First of all, it's parsing words with regard to "highly accommodative", Kocherlakota just redefined accommodative which was until today considered a Fed Funds rate of zero to .25%, now it means 50 basis points higher. 50 basis points in a single move sounds more like panic and would have a dramatic effect on the Fed's balance sheet not to mention the speculative money banks have out in the market. 


I think this explains a lot and I think the banks had a heads up, probably last week.