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

Thank you, Mr. Chairman. I think the best course of action today is to lower the fed funds rate by 50 basis points as in alternative B. I’ve heard cogent arguments that 50 basis points would be restrictive and likewise accommodative. Yesterday I had a chance to look at the disabilities-related display in the elevator lobby on the Concourse Level, and I took some comfort in the fact that many great people are or were bipolar. So whether it’s restrictive or accommodative, I can be convinced either way. I can live with the idea that this does not incorporate a great deal of insurance against the downside, provided that the language doesn’t preclude further timely action as we have been using the word “timely.” So regarding paragraph 4, my preference is for language that, first, serves to signal that the Committee is fully aware of the situation and not behind the curve, a signal that’s reassuring and confidence enhancing, and, second, preserves our nimbleness, our flexibility, meaning that it doesn’t preclude any options to respond to developments, including further moves and intermeeting actions. I think the straightforward phraseology “downside risks to growth remain” as opposed to what was suggested in alternative A, which included “may well,” is preferable because the alternative A language strikes me as a bit too clever and risks appearing out of touch. I also think that repetition of the “in a timely manner” language from the January 22 statement preserves the options to move in an intermeeting action if necessary. So I think alternative B language is acceptable because it is spare, straightforward, and familiar, and it’s the least likely to confuse the markets in the near term. Thank you, Mr. Chairman.

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