WASHINGTON (MNI) – The following text is the Federal Reserve’s
Friday explanation of how the anonymous views of 17 FOMC participants
will be depicted as to both the time of the first rate raises and the
path of the federal funds rate in the years ahead, for 2 p.m. ET release
Wednesday just prior to Federal Reserve Chairman Ben Bernanke’s news
conference:
The Federal Reserve on Friday released blank templates showing the
format of the two charts it will use on January 25 to report Federal
Open Market Committee (FOMC) participants’ projections of the
appropriate target federal funds rate. It also released a draft of an
explanatory note that will accompany the projections.
The first chart, which will have shaded bars when released on
January 25, will show FOMC participants’ projections for the timing of
the initial increase in the target federal funds rate. The second chart,
which will have dots representing policymakers individual projections
when released on January 25, will show participants’ views of the
appropriate path of the federal funds rate over the next several years
and in the longer run.
—
These are the Fed advisories that will accompany the federal funds
projection charts:
NOTE: In the upper panel, the height of each bar denotes the number
of FOMC participants who judge that, under appropriate monetary policy
and in the absence of further shocks to the economy, the first increase
in the target federal funds rate from its current range of 0 to 1/4%
will occur in the specified calendar year. In the lower panel, each
shaded circle indicates the value (rounded to the nearest 0.25 percent)
of an individual participant’s judgment of the appropriate level of the
target federal funds rate at the end of the specified calendar year or
over the longer run.
—
Explanation of Policy Path Charts
These charts are based on policymakers’ projections of the
appropriate path for the FOMCs 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.
— In the upper panel, the shaded bars represent the number of FOMC
participants who project that the initial increase in the target federal
funds rate (from its current range of 0 to 1/4 percent) would
appropriately occur in the specified calendar year.
— In the lower panel, the dots represent individual policymakers’
projections of the appropriate federal funds rate target at the end of
each of the next several years and in the longer run. Each dot in that
chart represents one policymaker’s projection. Please note that for
purposes of this chart the responses are rounded to the nearest 1/4
percent, with the exception that all values below 37.5 basis points are
rounded to 1/4 percent.
These projections of the timing of the initial increase of the
target federal funds rate and the path of the target federal funds rate
are the ones that policymakers view as compatible with their individual
economic projections.
— end of Fed texts —
** Market News International Washington Bureau: 202-371-2121 **
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