Well, there’s some uncertainty about that. I think it would get to between 1.5 and 2 percent.

The path I was thinking about as I was doing the forecast and trying to determine the appropriate policy here—my desire is to get inflation down lower, and that’s reflected in my forecast—is one in which the fed funds rate goes up somewhat from where it is ...

That’s right, somewhat tighter, somewhat more aggressive than what’s in the Greenbook.

Thank you, Mr. Chairman. Conditions in the Third District have continued to evolve much as they have for most of the past several months. Economic activity is still expanding. I think I can use the word “moderate”—I don’t think anybody else has used that yet, and our contacts ...

Thank you. I have a question that is related to this issue, but it comes out of the Bluebook. I think I understand how this model is working, but then I get a surprise, and I realize I really don’t understand how it works. I noticed in the Bluebook ...

Excuse me, I read about it.

By the way, Mr. Chairman, I want to thank you. I thought your exchange of letters with Senator Dodd, I guess it was, over the automobile issues was well done.

And what are the limits to it?

But in some sense, just to follow up on this point, the limits are what is really important here because, as long as we don’t define some limits and we just say limited by TARP capital, well, that doesn’t really answer the question. As long as the markets ...

I guess, given the zero lower bound issues that we have been discussing and some of the consequences of being there, the difficulty of dealing with policy in that environment, in previous meetings on this topic we have talked about the prospects of specifying the funds rate path or the ...

This is a clarification, Mr. Chairman. I hate to be difficult, but in thinking about this as a step, we talked about an inflation target. What other steps do you see that we need to clarify as we try to make this process more—I’m looking for some forward-looking ...

Yes, much improved.

Of the Committee’s policy—fine.

I think it is the focus of the FOMC’s monetary policy.

Would you read that again, please? I’m sorry, Mr. Chairman. This is very difficult.

Thank you, Mr. Chairman. These are, indeed, troubling times, and I think in troubling times it’s even more important that we be as transparent and clear as possible. I think it’s time that we publicly convey that we have entered a new monetary policy regime. To do otherwise ...

I guess my trouble is that the Committee judged that it is not useful to set a specific target for the funds rate and yet this will be interpreted as that we reduced the target in effect.

Just a follow-up on that. I am a little confused that we don’t set a target but we are operating under an interest on reserves scheme by which we pay a deposit rate, which in fact we just lowered. Is there some kind of disconnect between what is in ...

Thank you, Mr. Chairman. The Third District economic news is similar to the national news. It’s all bad. Our December business outlook survey, which remains confidential until Thursday, will post another very weak number. In November the number was minus 39.3. The December reading will be released, and ...

Thank you, Mr. Chairman. I, too, want to add my praise to the staff. It was an extraordinary set of memos, as Jeff indicated, making reasonably clear very difficult literature on a complex topic. So I want to thank them. Reading through them was very helpful to me in trying ...

Can’t we meet before then? [Laughter]

Just to follow up on that—I think that’s a very excellent suggestion, President Geithner. To be very specific about that, in our trial run, one thing that we did was to look at what we thought was the steady state. One way to engender some communication about the ...

Just a question or thought. As the staff prepares the review of the 2003 studies and memos and thinks about what zero effectively means and how we might operate in those circumstances, one thing I think would be useful to include is a discussion of whether or not when that ...

I’d just like to just take a moment to react. I’m not sure whom you heard saying that the result was primarily a result of this Committee’s actions or the Chairman’s actions or anyone else’s actions. If those were words you were putting in my ...

Thank you, Mr. Chairman. Clearly, forecasts have been marked down since our September meeting—mine included. This reflects the weaker data that we have obtained on the real side, especially consumer spending and manufacturing, but also worsening conditions in the financial markets. Accordingly, in an intermeeting move on October 8 ...

My, you’re good.

But even in my steady state, if I view this as a permanent inefficiency in financial intermediation that changes things, the unemployment rate is a little higher.

Yes, right.

Well, I don’t like the NAIRU, but in my baseline forecast, my natural rate of unemployment is higher than what the Greenbook has.

Yes.

Thank you, Mr. Chairman. I’m not going to say much about the District conditions. In the Third District, as many of you have noted, they’ve weakened considerably. I will make just a couple of observations that I think might be pertinent. Our last Business Outlook Survey, the one ...

I was looking at the table in the Greenbook, at the bottom. That’s where I was trying to back out some of this. Thank you very much.

You can give me a distribution.

I have a question. As you characterized the forecast in the Greenbook, it is really the result of very large adjustments to the financial constraints piece—in fact, they’re about double what they were in the September Greenbook—and those adjustments or factors really account for a large portion ...

Just a clarification. If we were to take that step, are there any other institutions that participate, other than the GSEs?

I guess I’ll approve, but with reluctance. I think this is a very slippery slope. I’m worried about other central banks ganging up on us as a group, saying that they have to have this. I would prefer that even these large countries use some combination of the ...

I just want to clear up the question. I think Tim and Nathan may have both answered this, but it’s a question that President Lockhart raised earlier. In Mexico’s case, for example, where almost all the major banks are foreign owned—EU banks, Spanish banks—those banks clearly ...

We don’t know what the needs are yet, do we?

I understand, but if you really follow the logic of the argument about being large and systemically important, if we draw a line somewhere, we start expanding this now bit by bit and we draw a line somewhere, and the question then becomes, Will markets begin to question other countries ...

I guess I’m worried about this for all of the considerations that President Hoenig and President Lacker have just been talking about. I don’t know where we draw the lines, and when we have to go to the State Department and start asking what countries we can or ...

I guess my question is why we can’t use the swap line that is already in existence.

I have just a clarification. This is a question. Don’t we already have a swap line, a standing facility, with Mexico as a part of NAFTA? So we don’t have to add it.

I would prefer that. I think it is more consistent with both your speech today and our previous statements and it still conveys the correct message. So I support and would be happy with just leaving out “materially.”

Thank you, Mr. Chairman. I’d just like to make a couple of observations and perhaps ask a question and make maybe one observation about language. As a general proposition, I do not like intermeeting cuts. I think they signal more panic than they do stability. On the other hand ...

We just thought we would outflank him, but we haven’t succeeded.

Thank you.

So they have already taken roughly $30 billion of the $54 billion losses they’ve promised they’d take?

Does the first $30 billion markdown come out of the $54 billion?

Thank you, Mr. Chairman. I have a question about the $300 billion of mortgage assets referred to that were segregated out, and the FDIC said that Citi will take the first $54 billion. Does anybody know whether that is current market value? What is the $300 billion? Is it market ...

It’s not pertinent to this particular decision, but I was going to ask Bill whether there are any other sorts of measures or tools that the Desk in New York is considering— that are being explored or thought about going forward?