WASHINGTON — In a continued sign of the Federal Reserve Board's beefed-up communication strategy, the central bank will begin airing senior officials' projections for the direction of future interest rates, according to official Fed minutes released Tuesday.
At last month's meeting of the Federal Open Market Committee, the central bank's policymaking body, participants "noted their dissatisfaction" with how the committee's views on Fed policy trends are communicated. Currently, members' forecasts about economic growth, jobs and inflation are aired in the FOMC's Summary of Economic Projections, released four times a year, but their projections about monetary policy — which may be tied to those other economic indicators — are not included.
The FOMC moved to include participants' projections about monetary policy starting this month.
Most FOMC members "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 meeting minutes said.
The decision comes in the wake of other Fed efforts to improve its public-awareness system. Last March, the central bank announced that Fed Chairman Ben Bernanke would begin holding quarterly press conferences to take questions about monetary policy. Bernanke's three press conferences since then have tackled a range of topics, extending well beyond monetary policy matters.
The meeting minutes Tuesday said the FOMC discussed "further consideration of ways in which the committee might enhance the clarity and transparency of its public communications."
While some members of the committee expressed concerns about including the separate projections about monetary policy of individual participants — suggesting that it would be less confusing for the public to see a consensus from the committee — most officials "viewed these concerns as manageable."
"Several noted that participants would have opportunities to explain their projections and policy views in speeches and other forms of communication," the minutes said.
Under the new communication policy approved by the committee, the SEP will detail where FOMC members project a prudent target funds rate will be in the fourth quarter of a given year, as well as longer-term. The rate has remained near zero for several quarters in the wake of the financial crisis.
"The SEP also will report participants' current projections of the likely timing of the first increase in the target rate given their projections of future economic conditions," the meeting minutes said. "An accompanying narrative will describe the key factors underlying those assessments as well as qualitative information regarding participants' expectations for the Federal Reserve's balance sheet."
Bernanke directed the FOMC's communications subcommittee to look at further enhancements "over the coming months."
