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

Thank you, Mr. Chairman. I support the recommendation embodied by alternative B. The Committee last time wanted to introduce a little more flexibility into the statement while not sending a message that our resolve about achieving price stability had changed. It took a while for that message to get through, but it did. Since not much has changed in the way the economy is unfolding relative to our expectations since the last meeting, I would prefer to make only the essential adjustments to the statement, such as acknowledging the recent slowing in economic activity. In the spirit of making only minimal changes, I would not add the clause “on balance” to the sentence on core inflation. We had the benefit of asking what we were trying to convey with that phrase and heard Vincent’s comments about time-series and cross-sectional perspectives, but the markets aren’t going to have the benefit of that explanation until they get the minutes. I am also concerned that introducing the language about uncertainty around inflation is going to have the markets trying to interpret what we are trying to say. They have a lower path to the fed funds rate built into their expectations, and I think they have been looking for language to help support that position; our saying that we are uncertain about inflation may appear to them as a bit dovish rather than hawkish. So I would just rather keep things where they are today, with very few changes to our language. I support alternative B without “on balance,” but that is obviously not a show stopper. Thank you, Mr. Chairman.

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