In hopes to display greater transparency of its inner workings, the Federal Open Market Committee (FOMC) announced that it will take a series of steps to give the public a greater understanding of the basis of its interest-rate decisions. Fed chief Ben Bernanke released a statement in conjunction with a speech on communications issues, noting that it would provide more timely information about the evolving outlook by releasing its economic projections 4 times a year, rather than twice a year as was the custom. The first set of the new projections will be released on November 20 along with the minutes of the Fed's Halloween meeting.
In this morning's speech, Bernanke noted that the measures represent an important further step toward greater transparency, which he believes will improve the effectiveness of monetary policy. Bernanke stated, if practitioners in financial markets gain a better understanding of how policy is likely to respond to incoming information, asset prices and bond yields will tend to respond to economic data in ways that further the central bank's policy objectives. The Fed head did state that the Fed's communication strategy remains a work in progress. Today's announcement had been reported; therefore, it was not a surprise to Fed observers.