Fed's new dashboard signals no rate hike soon

By Kristina Cooke

NEW YORK (Reuters) - The guideposts the U.S. central bank provided this week on what could drive an eventual move away from its extraordinarily easy monetary policy bolster the case for interest rates to stay low for a long time.

The Federal Reserve said on Wednesday that its near zero percent interest rate policy depends on the state of the economy and it singled out three areas to watch: resource utilization, inflation trends and inflation expectations.

Those guideposts, which the Fed had not included in its previous statement in September, delineate the two sides of the policy equation the central bank must balance: promoting economic recovery while ensuring prices stay stable.

Divisions among the Fed's policy makers on how soon and how aggressively the central bank may have to reverse its emergency support for the economy have become more apparent in recent weeks. The explicit guideposts provided in the Fed's policy statement on Wednesday speak to both camps.

"The change is open to competing interpretations, which may be what eventually led to its adoption," said Andrew Tilton, economist at Goldman Sachs. "For those committee members who see these variables as extremely low, the statement might actually seem like a stronger commitment to keep the funds rate low, but obviously others will see matters quite differently."

The federal funds rate, a benchmark rate set by the Fed, is what banks charge each other for overnight loans.

If recent data is anything to go by, the Fed's guideposts for assessing the need to adjust policy are unlikely to force the central bank's hand anytime soon, analysts said.

The U.S. economy may have shaken off its long recession, but most Fed officials expect the recovery to be slow.