Thank you, Mr. Chairman. I support alternative B in the Bluebook. If we cut the federal funds rate a further 50 basis points today, we will have done a lot in just a week and a half, but I think these actions do represent an appropriate response to a substantial deterioration in economic conditions. As I said in my comments on the economic situation, I basically agree with the Greenbook forecast for this year and perceive the risks to be to the downside. With the fiscal package, a funds rate of 3 percent will likely promote growth in the second half of this year that’s moderate after a brush with recession in the first half. I’m comfortable with this action because I believe our inflation objective is credible, and I do have confidence that we will be able to reverse the accommodation we’re putting in place when it’s appropriate to do so. But our discussion does highlight the important point that alternative B seems to be appropriate monetary policy in the context of the modal forecast. It just brings the real funds rate down to the Greenbook estimate of neutral, around 1 percent. If the economy were to go into a recession, additional easing would be needed and would be appropriate. Also, as Governor Kohn and others have emphasized, alternative B still doesn’t seem to incorporate much of anything for insurance against recession. So, indeed, there is a case for doing more than B. There is a case for A, but I wouldn’t go there today. I think we can wait, and I think we can watch as developments unfold and monitor data.
With respect to language, the skew in the risks toward a downside surprise and the possible need for insurance against that possibility, especially if we see some further deterioration in financial conditions—that strongly inclines me toward the assessment of risk sentences in alternative B with their asymmetry toward ease. We need to be absolutely clear, to state clearly today, that we recognize the continued existence of downside risk and communicate that we stand ready to cut further if necessary. Therefore, I would definitely retain the sentence in alternative B, paragraph 4, that states, “However, downside risks to growth remain.” However, I could see a case, following President Plosser’s suggestion, to substitute the wording from the last sentence of the December 11 statement to the wording in the last line in alternative B. That is, we could substitute the words “will act as needed to foster price stability and sustainable economic growth” for the words “will act in a timely manner as needed to address those risks.” This seems to me to be a small change that would, taken together with the new first sentence in paragraph 4, slightly dial down the perceived odds of further cuts relative to the proposed wording in B. Even without the change that President Plosser suggested, though, the fact that we have added the new first sentence in paragraph 4 does seem to me to change the wording of the assessment of risk enough relative to our intermeeting statement to communicate to markets that we will view future policy moves after the one today somewhat differently going forward. Today’s move and the intermeeting move are essentially catch-up, to put us where we think we need to be, and moves going forward will respond to the evolution that we see in the markets.