Suppose I were a Fed bank president who wanted to profit from advance knowledge of changes to rates.

When I know rates are going to decrease, I buy a growth ETF, like VIGRX, or a tech index like QQQ. Or I buy a bigger house, safe in the knowledge that prices will go up and I can refinance soon at lower rates. And if options are allowed and I want more gains, I buy calls on ETFs like the ones I mentioned.

When I know rates are going to increase, I instead simply get out and hold cash. Or if options are allowed, I buy puts on QQQ, or at least sell calls.

In all of these hypothetical transactions, I have benefited from my advance knowledge of rate changes, without picking a single individual stock.

I can even make an argument that these diversified trades are more reflective of rate changes, since those changes have broad impact across the economy, whereas specific stocks are confounded by all sorts of idiosyncratic things. Using these ETFs, I average out more of the random variables that aren't "interest rates".

So I don't see how this new rule, which bans stock picking by people at the Fed, matters a lot. These people don't regulate specific industries; they set rates. About the only exception I can think of is bank stocks: Maybe the Fed's interactions with specific banks are significant. But apart from that -- this seems good for appearances, but does it actually accomplish much?

For congresspeople on the other hand, or for people in regulatory agencies, I get it. You don't want a regulator siding with one company over another, or, indeed, from being overinvested in whatever sector they're regulating ("Let pharma get profits at all costs! What do I care about opioids?").

But for people at the Fed? It's not a crazy rule, but I also don't think it does much.