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

Thank you, Mr. Chairman. As some others have said, I want to applaud your leadership in laying out a proposal for how we think about this. It’s important to have a framework on the table for thinking about where we want to be. I would add that generally I agree with almost everything you said. I think it’s a good way forward. I view this as a step, not the end game. It’s part of a process in which we evaluate what we’re doing and how we do it. While I share in principle President Lacker’s concern about the potential risks associated with doing this without agreeing on explicit objectives, I’m willing to bear those risks because, since most people around this table know where I’d like to be in terms of that, I think the risks are acceptable in the short run as a means of getting us to that ultimate objective. I think that this will help us as a Committee become more comfortable with being more transparent and more communicative and that the process in itself will help us get to where I think we ought to be. So from that standpoint I’m very supportive of this direction. I support going through with it under the guidelines and broad outline that you described.

As to some of the specific things that Governor Kohn mentioned and we talked about, as I said, I want to proceed. I think four times a year is right. The details of the Monetary Policy Report to the Congress are just a detail. We can work them out. Somebody is better at figuring that out than I am. I think that shouldn’t be considered a stumbling block. I support moving to total inflation. As I said both yesterday and earlier today, I think that’s important. I’m marginally indifferent between total PCE and total CPI. Earlier I had advocated the CPI. I’m still perhaps at the margin, but to me that’s not a big issue one way or the other. I agree on the timing—the forecast and the projections ought to be based on information available at the meeting, not subsequent information. In fact, that’s very important in what we’re trying to communicate about our decisionmaking process. I’m fairly happy with the way the staff has crafted the language. I think they have done a pretty good job of capturing the sense. I’m rather indifferent about whether we incorporate it into the minutes directly or we make it an addendum. Again, I think the markets and this group can live with it either way, and people who read the minutes will come to understand and accept it one way or another.

The two points with which I have some trouble or perhaps a little disagreement with Governor Kohn’s comments concern the optimal policy and whether we reveal what’s implicit in the fed funds rate forecast going forward. I think that revealing a dispersion or the varying underlying policy assumptions that people are using going forward helps on the issue of uncertainty—that the world is uncertain and that our understanding of the way the macroeconomy works is uncertain. By revealing that some underlying sets of assumptions that we on the Committee are making to get to this set of objectives are different could actually be very helpful in reinforcing the view that the future is uncertain. Therefore, rather than locking us into some path, it may end up, in fact, opening up options to us in a way that we might not have had before. So I think there’s actually potential information there that we’re providing to the marketplace that may be valuable. Giving this area a bit more thought might be worthwhile.

The second point is one that President Pianalto just mentioned, and it just occurred to me after she mentioned it. I realized that, if we submit these forecasts anonymously and if they’re reported anonymously, even though the dispersions and so forth are reported in the minutes, we as presidents and as Board members are out giving speeches all the time about our outlook for the economy. At the end of the day, we are unlikely to stop giving out information about what our views are. It’s a little like hiding it over here, but everybody is out talking about what their view is anyway. So I’m not sure we are buying anything real by being anonymous about our forecasts. I guess I’m in favor of revealing more rather than less—revealing more about our uncertainties or our assumptions underlying the future path of the fed funds rate and having that information convey some uncertainty—and being more transparent, because we are anyway, about what our individual forecasts may have been in talking about that outlook. Thank you.

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