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

Thank you, Mr. Chairman. Like the others, I think the statement has basically evolved into a very good place. I sometimes worry that the process of putting a statement together by nineteen people will mean that there’s too much inertia in the process. But so far, maybe because the economy hasn’t jerked around very much recently, we’ve been able to keep up. But I do think we need to make sure that the language doesn’t lag the events or, if events start to move, we’ve got to be willing to change the language even though it’s hard here. I like the way the balance-of-risk section has evolved from talking about what’s going to happen to the funds rate—I agree with President Yellen that it was appropriate in the particular circumstances—to talking about the right-hand side of the Taylor rule—that is, what’s going to happen to the output or inflation gaps. So I think that’s positive. It gives a little very vague guidance about what the Committee is most worried about, and I think that’s probably helpful to the markets. That is then elaborated in the minutes, but it fills a three-week gap before the minutes come out. Certainly if we changed our minds about where we saw the risks to the economy, we would probably want to tell people about that before those minutes come out. So basically you’re in a pretty good place here, and it will continue to evolve. We just have to allow it to continue to evolve.

On the governance side, I think the editing is also going pretty well. When we got into the pre-meeting editing, I was a little concerned that the decisions were going to move outside the room. But the process has evolved in a way that we get close to what the final statement is in these pre-meeting sessions, and then we can fine-tune the language at the meeting. That’s probably where we need to be if we’re going to put out a statement. So I’m comfortable with where we are there. I think that most people outside this room think that the Committee is responsible for the whole statement, and we probably ought to acknowledge that by making the Committee responsible for the whole statement. But if we do that, we ought to understand among ourselves that the hurdle for dissenting on words should be very, very high or else we will get ourselves into a governance mess. Those are my thoughts.

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