Bernanke won't drop 1/4 or 1/2. He will raise 25 basis points

All of the discussion centers around whether the Fed will ease by twenty five or fifty basis points. Some few brave souls ponder whether Bernanke might leave things as they are. I have yet to hear anyone suggest that he will surprise us all by raising interest rates. But, that is precisely what I think he will do.

Bernanke is at heart an academic. And they are, if nothing else, totally unpredictable. He is also sensitive to the concern that he not be seen as predictable. His last set of actions has set a pattern, showing his willingness to stem panic and crisis. But he needs also to show toughness and independence from the market and from the hysteria that has gripped trading, especially, these last months.

Add to that that the American economy, excepting housing, has been showing a lot of strength and that the economy is growing at or near 3% this quarter. Consumers are still spending, companies hiring, and exports -- thanks to the weak dollar - climbing astronomically.

What is not to like? Why on earth would Bernanke drop rates? Why would he even leave things as they are? Why not regain his traction on fighting inflation?

He is going to surprise us all and raise rates. There is a lot of logic to this argument, save that the surprise factor would almost certainly send the markets into a downward spin. But, then -- if the last weeks are any indication -- they will come back almost as quickly. i bet he will bank on just such reactions and take the rates up a quarter basis points.