WASHINGTON (AP) — 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 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.
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 is open to launching 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.
