Tags: Bernanke | Fed | Rate | Forecasts

Bernanke: Fed May Name Officials Making Rate Forecasts

Thursday, 26 April 2012 09:07 AM

Federal Reserve Chairman Ben S. Bernanke said the central bank is considering identifying the interest-rate forecasts of individual policy makers as it reviews ways to improve its communications with the public.

The Fed is looking “for ways to improve transparency, and we’re looking at everything,” Bernanke said at a press conference following a meeting of the Federal Open Market Committee in Washington. Giving the names of the individuals making forecasts is “on the table.”

The Fed currently releases a chart showing dots which correspond to the interest-rate forecasts of its 17 policy makers and a table showing the range of their forecasts for inflation, growth and unemployment. The chart doesn’t give the names of the policy makers. Only 10 of them are voting members of the FOMC in any given year, and the chart and table do not explain the preferences of the FOMC’s voting membership.

Editor's Note: Study: Bernanke Intentionally Devalued the Dollar

The FOMC’s committee on communications discussed providing more information that “could convey a sense of how the committee might adjust policy in response to changes in the economic outlook,” according to minutes of the Fed’s March meeting.

Seven of 17 Fed officials expect borrowing costs to remain below 1 percent at the end of 2014, compared with nine in January, while 10 expected rates to be 1 percent or higher, versus eight in January, according to the chart released today.

2014 Pledge

Even so, the FOMC today repeated that borrowing costs are likely to remain “exceptionally low” at least through late 2014. The Fed lowered its target for the benchmark federal funds rate to zero to 0.25 percent in December 2008 as it battled the recession and later bought $2.3 trillion of Treasurys and housing debt to bring down long-term interest rates.

“We remain prepared to do more as needed to make sure that this recovery continues and that inflation stays close to target,” Bernanke said. Additional bond-buying is still “very much on the table.”

Officials forecast the unemployment rate would average 7.8 percent to 8 percent in the final three months of this year versus a forecast of 8.2 percent to 8.5 percent in January, according to central tendency estimates. The new forecasts are still far above policy makers’ estimates for full employment, which range from 4.9 percent to 6 percent.

The so-called central tendency economic forecasts exclude the three highest and three lowest projections.

Fed officials estimated the economy will expand 2.4 percent to 2.9 percent this year, compared with a January forecast of 2.2 percent to 2.7 percent. They see growth of 2.7 percent to 3.1 percent in 2013 and 3.1 percent to 3.6 percent in 2014.

Editor's Note: Study: Bernanke Intentionally Devalued the Dollar

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Thursday, 26 April 2012 09:07 AM
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