Fed minutes

Clues about where Federal Reserve officials see the economy heading — or how they can better battle the worst financial crisis since the 1930s — can be uncovered in documents, or minutes, released about three weeks after their closed-door monetary-policy meetings, held eight times a year.

The Fed released the minutes Tuesday from its historic Dec. 15-16 meeting. That's when the central bank took the unprecedented step of slashing the target on a key interest rate to an all-time low of between zero and 0.25 percent. It also vowed to use unconventional tools to jolt life back into the U.S. economy. The rate change, the first of its kind in the Fed's 95-year history, underscored just how far Fed Chairman Ben Bernanke and his colleagues are willing to go to help the crippled economy, which has been stuck in a recession since December 2007.

What's the point of providing the minutes from this and other Fed meetings?

If investors, businesses and consumers have a better grasp of what the Fed is thinking about interest rates and the economy, they may be inclined to respond the way the central bank wants them to. And that can help the Fed do its job.

The minutes provide a chronological narrative of a given meeting. Information on economic conditions — such as employment, consumer spending, industrial production, home building and the trade deficit — is often discussed in detail. So are inflation gauges, such as consumer prices. Overviews of various credit and financial barometers — such as rates on investments in U.S. government debt, or certain closely watched bank-to-bank lending rates — also are provided.

Summaries of discussions among Bernanke and his colleagues about economic and market conditions — how they see the situation unfolding, where they see risks growing or receding — also are contained in the documents.

Sometimes stronger signals are offered about what the Fed's next move on interest rates will be or what new tools could be created to combat the credit and financial crisis. Such clues can be helpful because Fed officials for the most part have a reputation for being tightlipped about potential policy moves.

The minutes released Tuesday show that Fed officials feared the economy will be stuck in a painful rut for some time despite their rate reduction. In fact, Fed officials thought the economy would contract sharply in the final three months of last year and in early 2009.

— Jeannine Aversa, The Associated Press