December 14, 2012 / 5:45 PM / 5 years ago

CHRONOLOGY-Federal Reserve's transparency steps

By Ann Saphir
    Dec 14 (Reuters) - The Federal Reserve has deployed a range
of unorthodox tools to spur recovery from the worst recession in
decades and in doing so has also made commitments about how long
it plans to use them.
    In December, it took the novel step of indicating it will
keep benchmark U.S. interest rates low not just for a specific
period, as it has since August 2011, but until unemployment
falls at least to 6.5 percent, unless inflation threatens to
rise above 2.5 percent. 
    In future statements, Fed Chairman Ben Bernanke said, the
U.S. central bank will drop the calendar-date guidance -
currently mid-2015 - altogether and rely solely on the
thresholds to guide expectations for when the Fed will finally
raise rates from near zero, where they have been since December
    The Fed has not offered explicit guidance on its open-ended
bond-buying program, which it says it expects to continue until
the labor market outlook improves "substantially."
    The following are the main strides the Fed, once a bastion
of secrecy, has taken toward more transparency since 1994:

    February 1994 - The policy-setting Federal Open Market
Committee 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. The FOMC has issued a statement after every meeting
since then, whether or not it has changed rates or shifted its
    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 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 quarterly
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
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
since then. 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.
    August 2012 - The Fed begins publishing quarterly, unaudited
financial results of its operations, starting with the first two
quarters of the year. The central bank previously had released
financial statements yearly. The move comes amid criticism from
Republicans, who want the Fed audited annually in a move that
could expose monetary policymaking to congressional oversight. 
    December 2012 - The Fed adopts thresholds for the first
time, saying it expects to hold rates near zero until
unemployment falls to at least 6.5 percent, unless the inflation
outlook for the next one to two years rises above 2.5 percent.

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