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

I like the statement as is. I was one of those who, when we considered accelerating the release of the minutes, thought that it would take some weight off crafting the statement, which we could shorten. Alas, I was incorrect, and that was sort of hopeless. So I’m giving up. I sort of like the length the statement is now. It does a reasonable job with what it does, with one exception—the last section, the so-called balance-of-risk assessment. I’ve argued this many times when we’ve talked about this. The intention is to convey the likely next direction of interest rate changes. Our general practice has been—there have been some exceptions—to describe the risks to the things we care about, and we invite people to deduce what we think of as the likely next direction of interest rate moves by inverting our policy reaction function somehow. I always thought that was problematic, needlessly obscure, and I liked the times when we crafted that statement fairly directly and explicitly with phrases like “policy firming.”

About the balance-of-risk assessments, I hesitate to put something else on the table, but we ought to think about the directive, too, because the balance-of-risk assessment came into the statement because it was in the directive and there was a tilt statement in the directive that originated in the ’80s as a way of providing the Committee’s sense of constraint on the Chairman’s discretion to make intermeeting moves. That’s my understanding of how it arose. Then it came to be about the next meeting when we did intermeeting moves, and now it’s just sitting there in the directive, and I don’t know what good it does in the directive really. You know, we don’t make intermeeting moves. I don’t know what our understanding is about discretion about intermeeting moves. I think that we’re supposed to have a conference call with everybody. So I don’t know why we need this little directive in there, and it seems to me you could just take it out of the directive.

About governance, I’m in favor of voting on the whole thing. I remember talking at one point with I think it was you, Mr. Chairman, and others about how it is backward for us to talk about the statement—to do negotiations about the statement—a week before we even talk to each other or read the Greenbook. But I don’t think that’s so problematic. It doesn’t end up putting our feet in cement really, and I think we’ve been able to have sufficient flexibility during the meeting despite what we said the week before. So I don’t view that as terribly problematic.

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