WASHINGTON (Reuters) - The Federal Reserve's meeting in late January will provide a good opportunity for the U.S. central bank to begin offering forecasts for interest rates, a top Fed official said.
"Policy needs to be contingent on the economy, not the calendar," Philadelphia Federal Reserve Bank President Charles Plosser told The Wall Street Journal in an interview cited in a story published on Thursday.
Plosser, who serves on a Fed panel that has been examining ways to improve the central bank's communications, said the January 24-25 meeting presents an opportunity to start publishing rate forecasts, the newspaper reported on its website.
The Fed has held the overnight federal funds rate close to zero since December 2008. In statements after its last four policy meetings, it has said it expected to keep rates ultra low until at least the middle of 2013.
The idea of the pledge was to keep financial markets from pricing in an expectation of higher rates at the first signs the recovery was building steam.
However, many policymakers are uncomfortable offering a commitment tied to the calendar and feel boxed in by what they see as an inflexible mid-2013 vow.
Fed Vice Chair Janet Yellen has equated a potential shift in the central bank's communications strategy with an easing of monetary policy.
Central bank officials are already scheduled to issue updated quarterly projections on economic growth, unemployment and inflation at the upcoming meeting.
In addition, Fed Chairman Ben Bernanke will hold a news conference, which he could use to explain any shift in the central bank's policy framework.
A Reuters poll earlier this month of big Wall Street firms that deal directly with the Fed found that 17 of 20 expected the Fed to shift its communications practices.
(Reporting by Timothy Ahmann; Editing by Gary Crosse)