Fed to make quarterly rate forecasts WASHINGTON - In a major shift, the Federal Reserve will start announcing four times a year how long it plans to keep short-term interest rates at existing levels, according to minutes from its December policy meeting. The shift marks the Fed's latest effort to make its communications with the public more open and explicit. The change is intended to reassure consumers and investors that they will be able to borrow cheaply well into the future. And some economists said it could lead to further Fed action to try to invigorate the economy. The Fed's first forecast for interest rates will be included in the economic projections it will issue after its Jan. 24-25 policy meeting. More guidance on rates might help lower long-term yields further - in effect providing a kind of stimulus. Lower rates could lead consumers and businesses to borrow and spend more. The economy would likely benefit. Lower yields on bonds also tend to cause some investors to shift money into stocks, which can boost wealth and spur more spending. The Fed has left its key short-term rate at a record low near zero for the past three years. In August, it said it planned to leave the rate there until at least mid-2013, unless the economy improved. In January, the Fed will release an interest rate forecast for the October-December quarter of 2012 and for the next few calendar years, the minutes show. It will update that forecast each quarter. After its Dec. 13 policy meeting, the Fed issued a statement that portrayed the U.S. economy as improving slightly. It declined to take any further steps to boost growth. The minutes show that some on the policy committee favored additional action to try to lift the economy - but only after the Fed's more explicit communication policy was in place. Mark Zandi, chief economist at Moody's Analytics, said he thought the minutes signaled that the Fed will keep its benchmark rate at a record low beyond the mid-2013 target it previously set. "Most people had expected the funds rate would start rising in the second half of 2013," Zandi said. But Fed officials seem to be more concerned about the economy's prospects than investors currently think. Dan Greenhaus, chief global strategist with BTIG, suggested that the Fed will launch another bond buying program later this year to try to further drive down long-term rates. But Paul Dales, an economist with Capital Economics, cautioned that the minutes contained few signs that a third round of bond purchases is imminent. He thinks that such a step would come only if the economy weakened. The Fed sketched a slightly healthier view of the economy after its last policy meeting for 2011. Hiring has picked up. And consumers are spending more despite slower growth globally. David Jones, an economist who has written several books about the Fed, said the decision to regularly update the public on expectations for interest rates carries some risk. If the Fed must alter its rate forecast in response to changes in the economy, it could lose credibility with investors. The Fed's plan for more explicit guidance on interest rates follows other steps to make the central bank more transparent that began under Chairman Alan Greenspan and accelerated under the current chairman, Ben Bernanke. Last year, Bernanke became the first chairman to hold regular news conferences. He has also sat for televised interviews and held town-hall meetings. Collectively, Bernanke's efforts have been intended to make the Fed's decision-making process less secretive, to cast himself as open and accessible and to counter his critics. Not until Greenspan's tenure did the Fed even announce any changes in its benchmark rate. Until then, financial firms had to study the Fed's purchases of Treasurys in the bond market to try to determine whether it was raising or lowering rates. Previous chairmen tended to think the Fed operated best when it could keep financial markets guessing. The announcement of the new communications strategy had little impact Tuesday on Wall Street. Stock markets had surged earlier in the day on positive manufacturing news in China, India and the United States. Stocks maintained those gains after the Fed minutes were released. The Dow Jones industrial average ended the day up 180 points, and broader indexes also closed higher. The U.S. economy is beginning the year after finishing strong in 2011. The Institute for Supply Management said Tuesday that U.S. factories enjoyed their best month of growth in December since late spring. And the struggling construction industry spent more on projects in November for the third time in four months, the Commerce Department said. The reports correspond with other brightening signs. Consumer confidence is up, unemployment benefit applications have tumbled and the unemployment rate is at a 3½-year low. Most economists predict growth accelerated in the final three months of last year. In the minutes released Tuesday, the Fed said it would also include a "narrative" to describe factors that influenced its interest-rate forecast. And the forecast will include information on officials' expectations for changes in the Fed's balance sheet. The central bank began aggressively buying long-term Treasury bonds and mortgage-backed securities at the height of the 2008 financial crisis. The purchases, intended to boost the economy by driving rates down, swelled the Fed's balance sheet to a record $2.93 trillion.