The notion of a 50 BP rate hike is starting to gain currency.
And if it were ever actually done it could do wonders for the currency of the central bank having the courage to take on the speculators.
The idea of a 50 BP hike by the ECB is discussed in the title link. A 50 BP hike by the ECB would insure that the Euro stays strong against the Dollar...and that would translate immediately into lower oil and gas prices...as oil and gas are "priced in" Dollars.
A 50 BP hike would also make Euro denominated bonds more attractive to international investors and Asian central banks.
I have often thought that IF Greenspan had done one 50 BP rate hike early on...he would have shocked the Wall Street speculators and sobered up the commodities traders...and we might not have gasoline at $2.75 per gallon now.
THIS NOTION THAT THE FED CAN'T "SURPRISE" THE MARKETS "OR ELSE" IS TOTALLY NEW...
ANYONE WHO HAS BEEN FOLLOWING WALL STREET FOR A DECADE OR SO SURELY REMEMBERS WHEN THE FED WAS THE MASTER OF WALL STREET...AND NOT IT'S TREMBLING SERVANT LIKE TODAY.
IF BERNANKE WANTS TO REALLY GET THE ATTENTION OF THE MARKETS HE SHOULD CONSIDER "DOING 50 BP" AT THE NEXT FED MEETING...
THEN, AND ONLY THEN, SHOULD HE GIVE THE WALL STREET TRADERS THEIR BELOVED "PAUSE."
A 50 BP hike will give the Dollar INSTANT AND RENEWED "respect" in the international markets...and would actually have a better effect on economic thinking that two hikes of 25 BP each.
IF BERNANKE WANTS RESPECT...HE SHOULD DO 50 BP NOW...AND REASSERT THE FEDS CONTROL OVER THE MARKETS FOR THE FIRST TIME IN YEARS.
