The FOMC raised the discount rate to 0.75% from 0.50%, effective tomorrow. The FOMC noted that the policy outlook is effectively the same as during the January meeting. But it also noted that it will assess whether further discount rate hikes are needed.

Just yesterday in the FOMC meeting minutes from January, it was becoming painfully clear that the FOMC was getting closer to hiking rates. Most notable was that the discussions had revolved around whether changing the “extended period” and more importantly that the FOMC was considering raising the discount rate.

It is unusual to see the FOMC hike or cut the discount rate and not move the Fed Funds rate, but that is what we are getting. Fed Chairman Ben Bernanke flagged the move last week, saying the U.S. central bank aimed to widen the spread between its main policy rate that remains pegged near zero and the discount rate at which banks can borrow from the Fed.

However, no one in markets expected it to act so soon and the timing of the move — well ahead of the March 16 policy meeting — prompted investors to price in a greater likelihood of a rise in the benchmark fed funds rate late this year. This Thursday’s move is the first increase in any of the Fed’s lending rates since the financial crisis blew up in 2007 and the first rate change since December 2008.

The discount rate is the interest rate that depository institutions are charged to borrow short-term funds directly from the Federal Reserve. Today is not a full rate hike. But this is the beginning of the end of all that free money.