Timeline: Federal Reserve's transparency steps

(Reuters) - The Federal Reserve on Wednesday took a series of historic steps toward making the inner workings of its once-secretive rate-setting committee public, publishing forecasts for short-term U.S. interest rates and the expected timing of its next rate hike. It also announced an inflation target.

The rate path projections, which will be released quarterly along with the Fed’s forecasts for growth, employment, and inflation, pushed back its likely first interest rate increase 18 months to the end of 2014, effectively promising a much longer period of ultra-accommodative monetary policy than before. The Fed had said rates would likely stay near zero until the middle of next year.

The U.S. central bank also said it will target 2 percent inflation, as measured by the year-on-year growth of the personal consumption expenditures price index. Setting an explicit inflation target was a long-cherished goal for Fed Chairman Ben Bernanke as part of his broader campaign to improve central bank transparency and effectiveness.

Doing so puts the Fed in line with many other central banks around the world that target specific levels of inflation.

The Fed, once a bastion of secrecy, has moved gradually toward greater openness. The following are some of the other main strides the Fed has taken in that direction since 1994:

February 1994 - The policy-setting Federal Open Market Committee (FOMC) begins to release statements announcing moves in the overnight federal funds rate, its main policy tool.

February 1995 - The FOMC decides to issue “lightly edited” verbatim transcripts of deliberations with a five-year lag.

August 1997 - The Fed publicly acknowledges policy is formulated in terms of a target for the federal funds rate. The FOMC begins to put a number on the intended federal funds rate in its policy-implementing directive to the New York Fed.

December 1998 - The FOMC adopts a policy of immediately communicating a major change in its views on the likely direction of monetary policy. The first announced bias shift was in May 1999. It has issued a statement after every meeting since then, whether or not it has changed rates or shifted its bias.

December 1999 - The FOMC adopts a new procedure on issuing assessments of balance of economic risks, instead of policy bias. The statement issued after the February 2000 FOMC meeting was the first with the new balance of risks language.

March 2002 - The FOMC adopts policy of immediately announcing whether there were any dissenting votes. Previously the roll-call vote was disclosed only when the meeting’s minutes were released.

July 2004 - The Fed begins to provide a forecast for core inflation, in addition to overall inflation, in its semiannual monetary policy reports to Congress. Fed officials generally focus more heavily on core inflation measures.

December 2004 - The FOMC decides to accelerate the release of its meetings’ minutes by making them public three weeks after each gathering as opposed to after the subsequent meeting, a lag of about six weeks.

February 2005 - The Fed provides two-year forecasts from policymakers in its February monetary policy report to Congress. Previously, the February report contained only forecasts for the current year.

November 2007 - The Fed says it will increase the frequency of its forecasts to four times a year from two, and extend the horizon of projections to three years from two.

February 2009 - The FOMC adds longer-run projections for GDP, unemployment and inflation to its three-year quarter forecasts. The move is seen as effectively establishing an informal inflation target.

December 2010 - As required by the Dodd-Frank financial reform law, the Fed releases the names of firms that borrowed from its special emergency programs during the financial crisis. The law did not require the release of details of past lending from its regular “discount window,” although future lending will be disclosed with a two-year lag.

March 2011 - The Fed releases the names of banks that borrowed from its discount window during the financial crisis after having run out of legal appeals to block publication.

April 2011 - Fed Chairman Ben Bernanke holds the Fed’s first-ever post-meeting news conference.

January 2012 - The Fed begins publishing policymakers’ projections of when the benchmark fed funds rate, which has been near zero since December 2008, will rise for the first time. It also makes public a chart showing at what level policymakers expect interest rates to be at the end of the next several calendar years and in the longer run.

The Fed also releases a statement of longer-run goals and policy strategy saying that inflation at the rate of 2 percent is most consistent with its price stability mandate. It said it could not specify a fixed goal for the other side of its mandate, employment, because labor market dynamics are influenced by a broad range of factors.

Compiled by Reuters’ Fed reporting team, Editing by Gary Crosse and; Jan Paschal