Fed to publish interest rate projections

4 January 2012 | By Gary Jackson

In the minutes to its December 13 Federal Open Market Committee meeting, the central bank reveals that forecasts about appropriate future monetary policy will now be included in its Summary of Economic Projections (SEP), which is published four times a year.

The SEP already includes predictions from individual committee members on economic growth, unemployment and inflation. The new system will offer investors an indication of how the Fed thinks interest rates will stand in the current calendar year, the coming two years and over the longer run.

“A staff briefing described the details of the subcommittee’s recommended approach and compared it with those taken by several other central banks,” the minutes explain.

“Most participants agreed that adding their projections of the target federal funds rate to the economic projections already provided in the SEP would help the public better understand the committee’s monetary policy decisions and the ways in which those decisions depend on members’ assessments of economic and financial conditions.”

The first set of forecasts will be found in the SEP to be published on January 25.

Ben Bernanke, the chairman of the Federal Reserve, indicated that the Fed will strive to become more transparent when speaking at the Federal Reserve Bank of Boston’s economic conference back in October.

Discussing ways policymakers can promote financial and economic stability, Bernanke said: “Monetary policy tools that can be brought to bear if necessary include the management of the central bank’s balance sheet and, to a greater extent than in the past, communication about future policies.”

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