Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Mr. Chairman, just one response to President Lacker’s and President Plosser’s observations, which I think are related. If you set the rate that we are going to pay for interest on reserves the same as the target rate for fed funds and the market does repair itself and resume, then you would expect there to be some risk spread over the rate that we are paying on interest on reserves. So if we don’t set a target or we set the target something higher than the rate that we are paying, at least if the markets do start to resume, then the Desk isn’t in a position of then having to try to drive the rate back down again.

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