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

Well, I, too, strongly am in favor of the direction you have proposed, Mr. Chairman, and the reasons that you laid out for moving in this direction. I would urge us to move as promptly as is practical down this path. I am fairly flexible about many of the specifics that would accompany this path because I think there is more than one way to skin the cat and I think it is important that we get there.

Before I get to some of the specifics, let me just say that I went back and looked at a fairly recent chronology of our changes to communication going back to 1994. I don’t know whether I got everything; all actions were not equally significant; and of course, we don’t have the counterfactuals, so we don’t know what would have happened had we not taken these steps. But I think it is fair to say that all our increases in communication, beginning with the press releases back in 1994 up through the expediting of the minutes and so forth, with the benefit of hindsight have worked out well. They have worked out well in part because we give these things pretty careful consideration and long deliberation before we move ahead. I think we have done that in this case as well, and so we are well positioned now to move ahead with this.

As far as some of the specifics go, yes, I would be in favor of the quarterly frequency. For now I would favor sticking with the three-year horizon. I am not particularly opposed to a longer one, but at least to date I think the three-year horizon would be a significant advance. It seems to have worked out reasonably well as far as the trial runs are concerned, and I would do that. In terms of the general shape of the latest trial run, the level of anonymity, and so forth, that was all fine with me, so I wouldn’t see any need to make any particular changes with regard to that. With regard to the form in which the projections should be released, I think I would come down in favor of President Moskow’s suggestion as some sort of appendix to the minutes. I think that will give us more flexibility over time and it will not be a big problem to make sure that whatever we say in the minutes is consistent with those projections. I think that is a manageable issue, so I would favor that. I would also favor cutting off the projections as soon as possible after the meeting for a couple of reasons. One is that not doing it raises the potential for confusion of what we know and when we know it, which we can and should avoid.

I also think that we don’t really want to put much emphasis on high-frequency data. Just because you get one or two more observations, most of the time they don’t make much difference; but even when they seem to indicate a significant departure from what we had expected, they are subject to revision or the next observation we get a day or two later may work in the opposite direction. It just doesn’t seem to me that there is a lot of advantage to emphasizing them.

I would be in favor of expediting the minutes, but I think I would defer that for now, just because we are talking about some major steps. We ought to get those in place first, and we can come back and think about expediting the minutes shortly thereafter, assuming that this all works out well, if that’s what we want to do. There are probably good reasons to do it at the end of the day, but I don’t view that as quite as important as some of the other things we’re talking about at this point. With that, that’s all I want to say. I think we are in the process of making some significant progress here, and I am encouraged by that.

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