By Denny Gulino

WASHINGTON (MNI) – The Federal Reserve Friday provided a sneak
peak of how those new federal funds projections are going to be
presented Wednesday, anonymously and from all Board members as well as
all the voting and non-voting regional Bank presidents — 17 in all.

Therefore, it is going to be impossible to deduce how Chairman Ben
Bernanke feels about the timeline for tightening, and the path beyond
that for the short-term interest rates the Fed controls.

There will be two charts released by the Fed at 2 p.m. Wednesday,
along with the updates to the FOMC’s economic assumptions, 15 minutes
prior to the start of Bernanke’s quarterly news conference.

The first will be a bar chart and the height of the bars will
represent the number of FOMC participants against a ‘Y’ axis of dates.
So the shaded bars will show how many FOMC participants project the
particular dates for the initial tightening through 2016.

The second will show dots in a scatter chart, each representing a
Federal Open Market Committee “participant”, and plotted against years
through 2014 and then for “the longer run.” The second chart is titled
“Appropriate Pace of Policy Firming,” and “Target Federal Funds Rate at
Year-End.”

The charts will be accompanied by a disclaimer that will say the
views depicted are those of the FOMC participants who, “under
appropriate monetary policy and in the absence of further shocks to the
economy” would time their preferred initial tightening date.

Since each FOMC participant has an individual view of “appropriate”
monetary policy, and no one can anticipate what future shocks might be
to the system, the disclaimer appears to say that the projections will
not necessarily correlate with future FOMC votes.

But the charts will give an outline of what the current FOMC
participants think is appropriate now, and analysts will no doubt be
averaging and deriving central tendency timing for rate hikes and
comparing them with interest rate projections offered elsewhere in the
Fed material.

The total of 17 FOMC “participants” takes into account the two
vacancies on the Board.

Said the Fed in its statements accompanying the templates Friday,
“These charts are based on policymakers’ projections of the appropriate
path for the FOMC’s target federal funds rate. The target funds rate is
measured as the level of the target rate at the end of the calendar year
or in the longer run. Appropriate monetary policy, by definition, is the
future path of policy that each participant deems most likely to foster
outcomes for economic activity and inflation that best satisfy his or
her interpretation of the Federal Reserve’s dual objectives of maximum
employment and stable prices.”

The templates themselves can be viewed at

http://federalreserve.gov/newsevents/press/monetary/fomcchartstemplates20120120.pdf

** Market News International Washington Bureau: 202-371-2121 **

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