FOMC minutes show members trying to improve transparency
The economy grew moderately over the final months of 2011, and the Federal Reserve continues to expect economic activity to increase gradually this year and next. The minutes of Dec. 13 meeting of the Federal Open Market Committee show central bank policymakers believe the eurozone financial crisis weighed heavily on investors during the fourth quarter. But concerns eased somewhat after the Fed and five other central banks help increase market liquidity by lowering currency swap agreements. The FOMC voted to keep the target fed funds rate near zero at the meeting and said it plans to keep reinvesting maturing mortgage-backed securities into agency securities and purchase long-term Treasury bonds. The Fed said the "substantial inventory of foreclosed and distressed properties and by weak demand that reflected tight credit conditions for mortgage loans and uncertainty about future home prices." Home prices fell further in December, although sales of existing homes rose 4% in November, according to the National Association of Realtors, which revised its benchmarks for sales and inventory data since 2007. The Fed discussion on commercial real estate was bleak, as financing remains strained and new commercial mortgage-backed securities issuance "was light amid deteriorating liquidity conditions" in the market. "Prices of most types of commercial properties continued to be depressed, while both vacancy rates and delinquency rates for commercial properties stayed close to their recent highs," according to the minutes of the December meeting. FOMC members also discussed ways to improve communications regarding monetary policy and staff projections. In April, Chairman Ben Bernanke held the first press conference the Federal Reserve had immediately following its monetary policy decision Gov. Janet Yellen is chairman of a Fed subcommittee reviewing the central bank's communications guidelines. The subcommittee recommends FOMC members include their estimates in the quarterly Summary of Economic Projections that the Fed publishes four times a year. After debate, the FOMC agreed to include information about projections for the federal funds and information about the "likely timing of the first increase in the target rate given their projections of future economic conditions" in the summary. The newly constituted FOMC meets for the first time in 2012 on Jan. 24-25. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw.