From the Fed, more clarity to come

WASHINGTON - The Federal Reserve under Ben S. Bernanke has gone further than ever to explain its policies. It's ready to go further still.

A Fed policy meeting Tuesday will likely focus, in part, on an evolving plan to reveal the direction of interest rates more explicitly. The Fed may decide, for example, to regularly update the public on how long it plans to keep short-term rates at record lows. A new communications strategy could be announced as soon as next month.

Most analysts expect no announcements Tuesday about the new strategy or any further steps to try to strengthen the economy. They think the Fed wants to delay any new programs to see whether the economy can continue its modest gains.

One possibility, should the economy worsen, would be for the Fed to buy more mortgage securities, which could help push down mortgage rates, help boost home purchases, and theoretically boost the broader economy.

The boldest move left would be a third round of large-scale purchases of Treasurys. But critics say this would raise the risk of future inflation. And many doubt it would help much because Treasury yields are already near historic lows.

Unless Europe's crisis worsens, few expect another program of Treasury purchases. Still, it cannot be ruled out.

After its September meeting, the Fed said it would rearrange its bond holdings to stress longer-term maturities, to try to exert more downward pressure on long-term rates. That followed its announcement in August that it planned to keep its benchmark rate at a record low until at least mid-2013.

Now, Fed officials are debating how much further to go to signal a likely timetable for any rate changes. Under one option, the Fed would start forecasting levels it envisions for the funds rate over the coming two years and publish the forecast four times a year.

"You could make investment decisions with more certainty," said Mark Zandi, chief economist at Moody's Analytics.

The Fed is also discussing setting an explicit target for "core" inflation, which excludes the volatile categories of energy and food. It has remained historically low - about 1.5 percent by one measure. Making a specific rate an official goal could anchor inflation expectations and guide investors on when the Fed might adjust rates to try to hit the inflation target.