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

Anticipating that a linguist will be reading this afterward, let me say that I strongly support alternative B. Since I’m assuming that the language is what we’re talking about, I support the current language even though there have been many suggestions for modifications. I am not inclined to make any suggestions myself or to accept any of the others that have been put on the table unless you, as the Chairman, decide to modify this language somewhat.

I have a couple of comments, though. Governor Kohn mentioned that we would have a long period in which we experience below-trend growth; but from my perspective, that’s what we intend. We have had a period of modestly tight policy, and therefore we should expect somewhat below-trend growth with the objective of bringing in our inflation numbers. We are right on track with that, and that is where we ought to be staying. I am very comfortable with this modestly tight policy. Over time it should systematically bring inflation down. I agree, again, with Governor Kohn’s earlier comment that we can do it in this way with minimal cost to the economy, which is our objective: to bring inflation down and to do it in the least costly way possible. So we need to stick with this policy as we have defined it here. I would also point out, just for the record, that if you want to make sure that we are not getting tied up into targets, as I have said before and will say again today, that I am not targeting on core PCE. I much prefer core CPI—it is more easily understood. If that is the case, then the 2 percent number, if we have to talk about a number, makes a lot more sense. We can get this any way we want, but the point is that we need to bring the inflation numbers down systematically, and we are not yet where I think most of us in this room agree we should be. So where we are with the policy under alternative B is, I think, a very good choice for us. I will end with that.

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