Chairman Bernanke came out today to discuss the possibility to increasing the Fed's discount rate in the near future. The Fed's discount rate, cousin to the more famous Fed fund's rate, is essentially the interest rate at which banks can borrow directly from the Fed.
His raising of the rate would signal that the financial sector is stable enough to operate without any more aid from the Fed, and that upward revision to the Funds rate is on the horizon as well.
In addition, he talked about raising the rate at which the Fed pays interest on bank's required reserves, another measure to withdraw liquidity from the financial system. Taking both actions together, it would seem that Bernanke is bullish on the state of the US economy, and that he is beginning to anticipate, if not take a tougher stance, on inflation.
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