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On Thursday, the Federal Reserve will announce its latest monetary policy decision.
Economists and strategists are basically split on what could happen.
But there is a small technicality surrounding what economists, strategists, pundits, and the media say when they say "the Fed has rates at zero."
Currently, the Fed has rates inside a corridor of 0%-0.25%.
Right now, that means the effective rate is 0.12% or 0.13% on a given day. If the Fed raises rates - meaning it raises the bands of its target corridor to 0.25%-0.50% - on Thursday, then this rate would go to something like 0.37% or 0.38% depending on the day.
The upper band, 0.25%, is the rate interest on excess reserves which is money that depository institutions - i.e. big Wall Street banks that are required to maintain certain balances with the Fed - keep at the Fed beyond what is required.
The 0% is for the Fed's overnight reverse-repurchase facility, which the New York Fed's desk carries out with eligible counterparties - things like money market mutual funds, for example - and this rate wobbles depending on how well bid the Fed's daily offer goes.
There's more detail from the New York Fed here and this is all sort of getting very deep inside the "plumbing" of the financial system.
But the point we're building to here is that maybe what the Fed does on Thursday is keep the bottom end of the range intact - which is to say it will still accept bid for its reverse-repo facility at 0% (though, of course, it does accept bids lower) - while raising the upper-end of its corridor to 0.50%.
Now, the Fed has been clear that when it does lift the Fed funds corridor, it plans to keep this inside of a 25 basis point range.
And considering that this hasn't really been talked about at all, the chances this happens are extremely remote.
But as we approach the Fed meeting which firms like Morgan Stanley could be characterized as thinks like a "hawkish hold" and a "dovish hike," completely meaningless terms just a week ago that are now being used soberly as real ways to describe a potential outcome, why not think about how the Fed might be creative.
Over at The Contrarian Corner, Kevin Ferry has written over the past few days about how the plumbing of the system could be shifted around.
Basically, one idea is that the Fed could simply move the reverse-repo rate closer to the upper band of the existing corridor, pinning this up against the excess reserve rate of 0.25%, and then you've tightened.
Ferry raised the point on Wednesday that when you're paying interest on excess reserves, you've basically got a broken system anyway, because it means your lending institutions would rather passively park money at the Fed than invest in, well, anything, even with rates as low as 0.25% or 0.50%.
Another idea Ferry tosses out is maybe you stop paying the excess reserve rate altogether, in which case the Fed desk would likely need to be prepared to absorb a huge amount of money looking to parked overnight.
But, in theory it's possible: at this point, anything is.