Tags: Fed | Interest | Rate | Changes

Inside the Fed's Crystal Ball: Rate Forecasts to Be Made Public

Tuesday, 03 Jan 2012 02:03 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
In a major shift, the Federal Reserve will start updating the public four times a year on how long it plans to keep short-term interest rates at record lows, according to minutes from its December policy meeting.

The first forecast will be included in the central bank's economic projections after its Jan. 24-25 meeting, the minutes, or written records, said.

The change marks the Fed's latest move to make its communications more open and explicit. It could help assure investors, companies and consumers that rates won't rise before a specific time.
_________________________________________________________

Editor's Note: Exposed: You Owe It to Yourself to Learn What Obama and Bernanke Are Hiding From Americans
This gripping Newsmax investigative report reveals the truth about America's economic future and the disastrous path that Obama’s and Bernanke’s reckless policies are taking us down. Watch, learn, and receive a free Survival Guide ($49 value) for your personal financial future. Click Here Now.

_________________________________________________________

This might help lower long-term yields further — in effect providing a kind of stimulus. Lower rates could lead consumers and businesses to borrow and spend more. The economy would likely benefit.

Lower yields on bonds also tend to cause some investors to shift money into stocks, which can boost wealth and spur more spending.

The Fed has left its key short-term rate near zero for the past three years. In August, it said it plans to leave the rate there until at least mid-2013, unless the economy improves.

After its Dec. 13 meeting, the Fed issued a policy statement that portrayed the U.S. economy as improving slightly. The central bank declined to take any additional steps to boost growth.

In January, the Fed will release an interest rate forecast for the fourth quarter of 2012 and for the next few calendar years, the minutes show. It will update that forecast four times a year.

The minutes also suggest that the Fed could be poised to launch a new step to invigorate the economy. Some members of the Fed's policy committee favored bolder action but wanted to wait until the more explicit communication policy was in place, the minutes show.

Dan Greenhaus, chief global strategist with BTIG, said he thinks the Fed will launch another bond buying program later this year to try to further drive down interest rates.

The minutes of its final policy meeting of 2011 show the Fed sketched a slightly healthier view of the economy. Hiring has picked up. And consumers are spending more despite slower growth globally.

The new guidance on interest rates had little impact on Wall Street. Stock markets had surged earlier in the day on positive manufacturing news in China, India and the United States. Stocks maintained those gains after the Fed minutes were released.

The Dow Jones industrial average was up more than 220 points in afternoon trading, and broader indexes also gained.

The U.S. economy is beginning the year after finishing strong in 2011. The Institute for Supply Management said Tuesday that U.S. factories had their best month of growth in December since the late spring.

And the struggling construction industry spent more on projects in November for the third time in four months, the Commerce Department said.

The reports correspond with other positive signs. Consumer confidence is up, unemployment benefit applications have tumbled and the unemployment rate is at a three-and-a-half-year low. Most economists predict growth accelerated in the final three months of last year.

However, Fed officials cautioned that business investment has slowed and unemployment remains high. And they warned of strains in global financial markets that pose a threat to the world's economy — a reference to Europe's debt crisis. They left open the possibility of taking new steps next year if the economy worsens.

The plan to forecast interest rates follows a historic decision last year to have Fed Chairman Ben Bernanke hold news conferences four times a year. Bernanke has also done a number of interviews and sought other changes to make the Fed's decision-making process more transparent.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Mali's Islamists Withdraw Cease-Fire Pledge

Friday, 04 Jan 2013 13:06 PM

Tens of thousands of Fatah supporters rallied in the Hamas stronghold of Gaza on Friday for the first time since they we . . .

Fmr. CIA Director Hayden: Iran Nuclear Crisis Gets 'Scarier'

Tuesday, 17 Jul 2012 18:11 PM

 . . .

Join Fmr. CIA Director for Special Iran Briefing, Assess the Danger

Friday, 13 Jul 2012 12:27 PM

 . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved