Fed says it will publish interest rate projections

Julian Harris
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THE FEDERAL Reserve will from this month onwards publish quarterly projections of future interest rates, in a move widely seen as a further attempt to stimulate the economy.

The policy change “could provide an opportunity for a back door policy easing in January”, said Harm Bandholz of UniCredit last night. “If for example most participants would not pencil in any rate hike until the end of 2014, the market would certainly take this as a strong signal,” he explained.

Fed chief Ben Bernanke has previously stressed his desire for more transparency at the bank, and has not hidden the intention to hold rates at their historic low.

A third phase of quantitative easing is unlikely to be announced this month, according to Paul Dales of Capital Economics.

“The Fed noted the recent acceleration in economic growth and, although it stated there were still ‘significant downside risks’, there was no real QE3 discussion,” Dales said. “Not very surprising when the incoming news has been fairly upbeat.”

The Fed’s minutes cited evidence “that economic activity was expanding at a moderate rate, notwithstanding some apparent slowing in global economic growth”.