THE US Federal Reserve yesterday said it would begin publishing forecasts on the path of interest rates later this month, a significant milestone in Ben Bernanke’s push for greater policymaking transparency.
The move is meant to better align bets in financial markets with the views of policymakers at the central bank, and it could show that rates will be on hold for longer than previously expected.
The Fed has held the overnight federal funds rate close to zero since December 2008. In statements after its last four policy meetings, it has said it expected to keep rates ultra low until at least the middle of 2013.
But policymakers have chafed at a pledge that was both tied to the calendar and static, and many investors think rates will be on hold for even longer.
In minutes from its December 13th meeting, released yesterday, the Fed said it would publish projections for the path of the federal funds rate along with its regular quarterly economic forecasts after its next meeting on January 24th and 25th. It also said officials would provide forecasts for the first rate hike.
The minutes said a number of Fed officials believed economic conditions could “well” warrant a further easing of monetary policy, and an enhanced communications framework could make any policy shift more effective.
However, a few others believed further stimulus would be a bad idea, a sign of the ongoing tussle at the central bank over whether the US economy needs more help.
At its December meeting, the Fed warned that turmoil from Europe’s debt crisis posed a major risk to the US economy. – (Reuters)
