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In an effort to be more transparent with the public, the Federal Reserve gave more insight into its planning tools Wednesday than ever before.

For the first time in the Fed’s history, the central bank released forecasts for the federal funds rate, its key tool for stimulating the economy, and released an explicit goal for the rate of inflation.

In addition, the Fed also released projections for inflation, economic growth and the unemployment rate, as it typically does four times a year.

So what does that all mean for the economy?

First the good news: Things would appear to be looking up for the job market. The central bank said it expects the unemployment rate to fall to between 8.2% and 8.5% in 2012, an improvement over what it had predicted back in November.

But the Fed is also predicting the economy will grow between 2.2% and 2.7% this year, slightly slower than it had previously thought.

"We continue to see headwinds emanating from Europe, coming from the slowing global economy and some other factors as well," Fed Chairman Ben Bernanke said in a press conference Wednesday afternoon.

Fed to keep rates low until 2014

Because economic growth remains sluggish, most of the policymakers at the Fed think the federal funds rate should remain near zero for the foreseeable future.

That said, they’re deeply divided when it comes to the timing for a rate increase. The interest rate forecasts showed five of the Fed’s 17 officials believe economic growth is slow enough to keep interest rates low until 2014. Six members thought rates should be hiked sooner than that, while another six believed low rates should remain in place until sometime after 2014.

Six of the 17 members expect the rate to be above 1% in 2014, while nearly all the members expect the fed funds rate to be around 4% in the long run.

Forecasting a low federal funds rate out to 2014 is thought to have a stimulative effect on the economy, by lowering interest rates on everything from mortgages to car and student loans.

But it’s not set in stone. Bernanke said repeatedly that the Fed will continue to monitor economic data and adjust its forecasts accordingly. If the economy starts to improve more rapidly, the Fed could raise interest rates sooner than currently projected.

"People should realize that these forecasts are highly dependent on economic conditions," said Dean Croushore, an economics professor at the University of Richmond. "These are only good forecasts if the economy actually grows as slowly as the Fed thinks it will over the next two years."

Experts are also quick to point out that the Fed’s forecasting record is far from stellar, and the wide range of internal viewpoints showed even at the central bank, uncertainty reigns.

"There’s such a range of opinions," said Greg McBride, Bankrate.com’s senior financial analyst. "Really putting those projections out there is going to do nothing more than reveal the human frailties of the Fed’s forecasting abilities."

Bernanke even conceded that point Wednesday.

"Our ability to forecast three and four years out is obviously very limited. There’s no question about that," he said.

Famous Fed flubs

Meanwhile, the central bank announced its new goal is to keep inflation around a 2% annual rate.

But this year, inflation is expected to remain below the new target, hovering between 1.5% and 1.8%.

If inflation remains low, the Fed could have some room to enact more stimulative policies, beyond the already $2.3 trillion in asset purchases it has made through two rounds of quantitative easing.

At the press conference, Bernanke essentially left the door open for QE3, remarking repeatedly that the Fed still has the ability to do more to bring the unemployment rate down.

"If the situation continues with inflation below target and unemployment declining at a rate which is very, very slow, then… the logic of our framework says we should be looking for ways to do more," Bernanke said.

The Fed’s press conferences, which started last year, and the new forecasts are all part of Bernanke’s goal to make the Fed more transparent.

"The Committee seeks to explain its monetary policy decisions to the public as clearly as possible," he said, reading from a statement. "Such clarity facilitates well-informed decision making by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and enhances transparency and accountability, which are essential in a democratic society." 

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Investment brokerage firm Stifel, Nicolaus & Co. will pay $1.1 million to settle a Missouri regulator’s allegation that the firm failed to reasonably supervise a former employee who ran a pyramid scheme.

The former stockbroker, Kenneth Neely, worked for St. Louis-based Stifel in its St. Peters office from October 2002 until January 2007 and later worked at another broker-dealer, AXA Advisors in Clayton, from December 2007 to July 2009.

In November 2009, the Missouri commissioner of securities accused Neely of committing multiple violations of selling unregistered and nonexempt securities, transacting business as an unregistered agent and making untrue statements in connection with the sale or offer of securities in a St. Charles real estate investment trust and a fraudulent investment club.

According to the state of Missouri, Neely told friends and church members that his investment club would pay up to 20 percent in interest a year. However he failed to tell the investors that the securities were unregistered. He did this during the time he worked at Stifel and later at AXA, the state said.

Neely was convicted in February 2010 on mail fraud charges and sentenced to 37 months in prison. He is serving his sentence at a federal correctional facility in Indiana.

On Tuesday, the Missouri Secretary of State’s Office announced Stifel’s settlement after a two-year investigation by the enforcement section of the Missouri Securities Division.

“These events occurred more than five years ago. We welcome the opportunity to put this matter behind us,” Stifel said in a news release. “All of the affected clients will receive restitution … We would note that Neely’s illegal activities occurred outside the scope of his employment with Stifel.”

While agreeing to the facts surrounding the case, Stifel neither admits nor denies the regulator’s allegations, the consent order said.

According to the state, Stifel failed to detect or investigate red flags during Neely’s employment, including a customer’s check sent to Neely’s home address and a customer’s concerns relating to Neely’s investment club. The state alleged that Stifel failed to reasonably supervise Neely, his private securities transactions and emails.

“Every firm has a duty to supervise and to take steps to detect fraudulent activity by its agent, and this action reinforces that investors should always exercise caution when looking at potential investments,” Missouri Secretary of State Robin Carnahan said in a statement.

Stifel will pay $531,385 in restitution and interest to 10 investors in Missouri, California, Florida and Maryland. Additionally, Stifel will pay $500,000 to the Missouri Investor Education and Protection Fund and $70,000 for the costs of the Securities Division’s investigation.

As part of the settlement, Stifel’s registration with the state is censured, and the firm is required to hire a consultant to study its supervisory and compliance activities. A report from the consultant is due in three months.

New York-based AXA, Neely’s other former employer, signed a similar consent order with the state in December 2010.

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Germany floated the idea of combining Europe

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EDWARDSVILLE • The executive committee of the Leadership Council Southwestern Illinois announced on Friday the resignation of the organization’s executive director, Patrick McKeehan.

“After strengthening the council’s relationships with various regional partners on both sides of the river over the past five years and helping to define the key priorities we need to focus on over the next decade, Patrick has determined it is time for a new challenge,” Rich Connor, president of the Leadership Council, said in a written statement. He said McKeehan made many significant contributions to the region and organization.

McKeehan could not be reached for comment. He came to the Leadership Council in 2006 after stints with the Missouri Department of Economic Development, the St payday loan no faxing. Louis Regional Commerce and Growth Association, the Ford Hazelwood Task Force and the St. Louis Regional Automotive Partnership.

Connor said a search committee for a successor would be convened quickly. He said Scott Schanuel, a private consultant formerly with Belleville Economic Progress Inc., would serve as executive director on an interim basis.

The Leadership Council is a coaltion of businesses that has promoted economic development in Madison and St. Clair counties since 1983.

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American Airlines contributed only $6.5 million of the $100 million that it was supposed to pay into employee pension plans this week.

The underpayment raised tension between the company, which filed for bankruptcy in November, and federal pension-protection officials.

“This is a disturbing development, as the airline has more than $4 billion in cash,” said J. Jioni Palmer, a spokesman for the Pension Benefit Guaranty Corp., which insures certain types of retirement plans. “American’s actions hurt the financial health of the pension plans and undermine the retirement security of American’s workers and retirees.”

American spokesman Sean Collins said, “The company has determined this is the appropriate course of action for the quarterly contribution amount due by Jan. 15, 2012. This action allows the company to preserve cash.”

American and parent AMR Corp. filed for bankruptcy protection Nov. 29 after losing $11 billion since 2001 no fax needed payday loans. The company hopes to reduce debt and labor costs while it reorganizes.

Company executives and lawyers have raised the possibility that American could terminate its pension plans, under which retirees get fixed monthly payments.

PBGC director Joshua Gotbaum has publicly criticized American for even suggesting that it might terminate pension plans. Gotbaum’s agency would take over the airline’s obligations.

The PBGC ran a $26 billion deficit last year, the largest in its history, as the recession and weak recovery caused more companies to eliminate pension plans. Gotbaum has said that taxpayers might have to bail out the agency, if Congress doesn’t raise insurance premiums on private companies with pension plans.

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U.S. factories are roaring back from the depths of the recession, cranking out more machinery, vehicles and energy.

Factory production has surged 15 percent above its lows of 2 1/2 years ago and is helping drive the economy’s recovery.

A jump in manufacturing output last month coincided with other data suggesting that the economy began 2012 with renewed vigor. Wholesale prices are tame. Demand for U.S. Treasury debt should help keep borrowing costs low. Even homebuilders are more optimistic.

Signs “that manufacturing in the U.S. is gaining global market share appears to be growing, and this could be an important dynamic supporting growth in 2012,” said John Ryding of RDQ Economics.

Manufacturing rose 0.9 percent from November to December, the Federal Reserve said Wednesday. It was the biggest monthly gain since December 2010.

Overall output at the nation’s factories, mines and utilities grew 0.4 percent. Warm weather dampened demand for energy produced by utilities.

Over the past year, factory output has risen 3.7 percent. Factories benefited in particular in the second half of 2011 from several trends: People bought more cars. Businesses spent more on industrial machinery and computers before a tax incentive expired. And companies restocked their supplies after cutting them last summer.

The growth has also fueled more hiring. Factories added 23,000 jobs in December, the most since July. That helped reduce the unemployment rate to 8.5 percent, the lowest level in nearly three years.

Among the manufacturers faring better is Steris Corp., which makes sterilization equipment and other medical supplies. Hospitals and drug companies are buying more of the company’s products.

Steris, based near Cleveland, says it has added 250 employees in the past 18 months and is still hiring. It has more than 5,000 employees globally, about half of them in the United States.

Steve Norton, a spokesman, said Steris has benefited from being part of a regional cluster of biomedical firms and research facilities. Some manufacturers in the region that once focused on auto parts are now also making components for medical devices, he noted.

“The Midwest continues to be a manufacturing leader,” Norton said.

Still, Europe’s debt crisis has begun to dampen demand for American exports. That trend, should it continue, could slow manufacturing and threaten growth this year.

That hasn’t happened yet.

December’s gains suggest the industry “is still resistant to the apparent slowdown in growth elsewhere, particularly in Europe,” said Paul Ashworth, chief U.S. economist with Capital Economics.

Businesses are starting to see some relief from high energy and food prices, which should benefit consumers later this year.

The producer price index declined 0.1 percent in December, the Labor Department said payday loans. The index measures price changes before they reach consumers.

“Core” wholesale prices, which exclude food and energy costs, rose more sharply in December _ 0.3 percent. But economists downplayed the increase. They cited temporary factors that had pushed auto prices down in October and November.

Overall, wholesale prices are trending lower. They increased 4.8 percent in December compared with the same month a year ago, reflecting in part the effect of higher oil and other commodity prices. Even so, it’s the slowest annual increase since January and down from 7.1 percent in July.

Falling prices for oil and agricultural commodities have lowered the cost of food and gas. Gas prices have turned upward in recent months, but economists don’t expect that to worsen inflation this year. That’s because prices will likely be lower than last winter and spring, when political turmoil in North Africa and the Middle East sent prices up.

Lower wholesale costs mean manufacturers and retailers face less pressure to raise prices for consumers to maintain profits. That could keep consumer price inflation in check. Lower inflation also gives the Federal Reserve leeway to keep short-term interest rates low and take other steps, if necessary, to boost the economy.

Borrowing costs are likely to stay low next year, especially if U.S. Treasury debt remains in strong demand around the globe. That’s because high demand for Treasurys drives their yields down. Those lower yields, in turn, help keep interest rates down on other loans throughout the economy.

Foreign holdings of U.S. Treasurys rose in November to a record $4.75 trillion, the Treasury Department said. U.S. government debt is still considered among the safest investments. And it has been in high demand as worries about Europe’s debt crisis have intensified.

The dollar has strengthened in recent weeks, particularly against the euro. A stronger dollar makes imports cheaper and helps keep inflation in check.

Lower rates on long-term Treasury debt tend to drive down mortgage rates. So far, super-low home-loan rates haven’t given much life to the depressed housing market. But they have made U.S. homebuilders slightly less pessimistic.

The National Association of Home Builders/Wells Fargo builder sentiment index rose in January for the fourth straight month, to its highest level since June 2007.

The reading remained far below levels that suggest they are optimistic about a turnaround. Homebuilders appear to be drawing optimism from rising interest among would-be buyers _ interest that builders hope will increase sales this year.

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Asian stock markets were mostly higher Tuesday, buoyed by a successful sale of French government bonds and shrugging off data showing that China’s growth is moderating.

Japan’s Nikkei 225 index added 0.6 percent to 8,430.73. Hong Kong’s Hang Seng climbed 1.5 percent at 19,297.77 and South Korea’s Kospi jumped 1.5 percent to 1,886.12.

But shares in mainland China slipped into negative territory after the release of government figures showing that growth in the world’s second-largest economy slowed in the final quarter of 2011 to 8.9 percent, its lowest rate in 2 1/2 years.

For the full year, the Chinese economy grew 9.2 percent, down from 2010’s blistering 10.3 percent.

Still, most key benchmark stock indexes posted gains, buoyed by a strong sale of French bonds on Monday and taking a downgrade of the Europe’s emergency bailout fund in stride.

France easily sold about euro 8 free credit report and score.6 billion ($10.9 billion) of debt with very short maturities, as well as 25-week and 51-week bonds.

On the secondary markets, where the issued bonds are later traded openly, the interest rate on France’s benchmark 10-year bond fell, indicating investors feel France remains a relatively good bet _ and perhaps are paying less heed to ratings agencies.

Still, investor sentiment faced multiple headwinds, including Standard & Poor’s downgrading of the creditworthiness of the eurozone’s rescue fund by one notch to AA+. That could hurt the fund’s ability to raise cheap bailout money to resolve a debt crisis that has dragged on for more than two years.

U.S. markets were closed Monday for a public holiday.

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French President Nicolas Sarkozy says France must have the courage and calmness to make difficult decisions to overcome the financial crisis, in his first public appearance since the country’s credit rating was downgraded.

But Sarkozy avoided any mention Sunday of the loss of France’s prized AAA rating in a Standard & Poor’s review two days earlier.

Instead he issued a rallying call, saying that a united France committed to reform would make it through No teletrak payday loan.

France chooses a new president this spring, and Sarkozy was already behind in the polls before the downgrade.

The loss of the AAA rating was a severe blow to France’s self-image and is expected to hurt Sarkozy’s standing even further.

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The French finance minister said Friday that Standard & Poor’s had stripped the nation of its top-notch credit rating, again throwing Europe’s ability to fight off its debt crisis into doubt.

Speaking on France-2 television, Finance Minister Francois Baroin confirmed that France had been lowered by one notch. That would mean a rating of AA+, the same rating the United States has had since S&P downgraded it last August.

Baroin said France had received a change to its rating “like most of the eurozone,” referring to the 17 European nations that use the euro currency, but there was no confirmation from S&P that any other nation had been downgraded.

A credit downgrade would escalate the threats to Europe’s fragile financial system, escalating the costs at which the affected countries _ some of which are already struggling with heavy debt loads and low growth _ borrow money.

Baroin said the downgrade was “bad news” but not “a catastrophe.”

“You have to be relative, you have keep your cool,” he said. “It’s necessary not to frighten the French people about it.”

S&P had warned 15 European nations in December that they were at risk for a credit downgrade.

Earlier Friday, as rumors of a looming downgrade swirled around the financial markets, the euro hit its lowest level in more than a year and borrowing costs for European nations rose. Stock markets in Europe and the U.S. fell.

The fears of a downgrade brought a sour end to a mildly encouraging week for Europe’s heavily indebted nations and were a stark reminder that the 17-country eurozone’s debt crisis is far from over.

Earlier Friday, Italy had capped a strong week for government debt auctions, seeing its borrowing costs drop for a second day in a row as it successfully raised as much as euro4.75 billion ($6.05 billion).

Spain and Italy completed successful bond auctions on Thursday, and European Central Bank president Mario Draghi noted “tentative signs of stabilization” in the region’s economy.

The downgrades could drive up the cost of European government debt as investors demand more compensation for holding bonds deemed to be riskier than they had been. Higher borrowing costs would put more financial pressure on countries already contending with heavy debt burdens.

In Greece, negotiations Friday to get investors to take a voluntary cut on their Greek bond holdings appeared close to collapse, raising the specter of a potentially disastrous default by the country that kicked off Europe’s financial troubles more than two years ago.

The deal, known as the Private Sector Involvement, aims to reduce Greece’s debt by euro100 billion ($127.8 billion) by swapping private creditors’ bonds with new ones with a lower value, and is a key part of a euro130 billion ($166 billion) international bailout payday advance. Without it, the country could suffer a catastrophic bankruptcy that would send shock waves through the global economy.

Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos met on Thursday and Friday with representatives of the Institute of International Finance, a global body representing the private bondholders. Finance ministry officials from the eurozone also met in Brussels Thursday night.

“Unfortunately, despite the efforts of Greece’s leadership, the proposal put forward … which involves an unprecedented 50 percent nominal reduction of Greece’s sovereign bonds in private investors’ hands and up to euro100 billion of debt forgiveness _ has not produced a constructive consolidated response by all parties, consistent with a voluntary exchange of Greek sovereign debt,” the IIF said in a statement.

“Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach,” it said.

Friday’s Italian auction saw investors demanding an interest rate of 4.83 percent to lend Italy three-year money, down from an average rate of 5.62 percent in the previous auction and far lower than the 7.89 percent in November, when the country’s financial crisis was most acute.

While Italy paid a slightly higher rate for bonds maturing in 2018, which were also sold in Friday’s auction, demand was between 1.2 percent and 2.2 percent higher than what was on offer.

The results were not as strong as those of bond auctions the previous day, when Italy raised euro12 billion ($15 billion) and Spain saw huge demand for its own debt sale.

“Overall, it underscores that while all the auctions in the eurozone have been battle victories, the war is a long way from being resolved (either way),” said Marc Ostwald, strategist at Monument Securities. “These euro area auctions will continue to present themselves as market risk events for a very protracted period.”

Italy’s euro1.9 trillion ($2.42 trillion) in government debt and heavy borrowing needs this year have made it a focal point of the European debt crisis.

Italy has passed austerity measures and is on a structural reform course that Premier Mario Monti claims should bring down Italy’s high bond yields, which he says are no longer warranted.

Analysts have said the successful recent bond auctions were at least in part the work of the ECB, which has inundated banks with cheap loans, giving them ready cash that at least some appear to be using to buy higher-yielding short-term government bonds.

Some 523 banks took euro489 billion in credit for up to three years at a current interest cost of 1 percent.

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Bank of England Governor Mervyn King may refrain from adding to emergency stimulus again today as policy makers await new forecasts and the economy showed some resilience heading into 2012.

The Monetary Policy Committee will maintain its 275 billion-pound ($422 billion) bond-purchase target after a meeting in London, according to all but one of 41 economists in a Bloomberg News survey. Citigroup Inc. and Royal Bank of Scotland Group Plc say it will increase the amount next month when current purchases end. The central bank has been buying about 5.1 billion pounds of gilts a week since October.

U.K. services and manufacturing gauges unexpectedly rose last month, signaling the economy gained some strength. Still, Bank of England officials have said the economy is probably stagnating as Europe

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