This Monday, FED held a closed door meeting to discuss over discount rates to review it and whether to adjust it upwards. No major change has occurred, however a minutes of the previous meeting held on October 26th was released, a meeting which was held before FOMC meeting on October 27th-28th.

• The discount rate is interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window.
   
• Federal Reserve Banks offer three discount window programs to depository institutions: primary credit, secondary credit, and seasonal credit, each with its own interest rate.
   
• Current interest rates are, 0.75% for primary credit, 1.25% for secondary credit and 0.2% for seasonal credit and FED funds rate is at 0-0.25%.
   
• Discount window loans are fully secured.

The minutes show, most policymakers are not too dovish on rate fronts, moreover hawkish camp is growing in numbers. 9 of the 12 regional FED president expressed preference to hike discount rates in October, compared to 8 in September and 5 in both July and August. The rates were not raised because the decision is finally up to the board of governors.

While some may shrug off the discount rates importance, we would like to counter it saying that it is a vital source of financing at time of stress, moreover the secondary credit rate (1.25% now) keeps ceiling over short term rates.

FED seems to be closer than ever to hike rates in December. The details (minutes) of the Monday meeting will be published only after December FOMC (...so sad).