Mackenzie: Fed funds rate points to policy shift

"...The central bank in December 2008 set a target range of zero to 0.25 per cent for its overnight Fed funds rate. This policy was an unprecedented step for the Fed and underscored the severity of the crisis.

In recent weeks, however, the Fed funds rate has been edging higher in daily trading, rising from a general level of about 10 basis points as recently as February to above 20bp currently - with spikes above 30bp...

Market participants also note that past increases in Libor have heralded rate rises by the Fed. In 2004, for example, Libor began moving higher three months before the Fed started tightening.

Yesterday, three-month dollar Libor was set above 0.30 per cent for the third day running - its highest level since September. It has risen from a record low of 0.248 per cent in January..."