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

Well, your recollection is correct, I think. That was probably just a hazy answer, not a hazy memory on your part. In some sense our basic view is that getting to 2 percent is the gravitational constant that we currently see. We haven’t really seen any evidence to suggest any significant shift in that view in recent months. Something below that number, on a sustained basis, is harder for us to see. In some sense, implicit in this forecast is that, at the end of 2008 and into an extended Greenbook forecast, we get 2 percent without creating an output gap that would actually drag things down further. Then the question is how quick the dynamics might be to take you to 2 percent. The view in our forecast is that the movement would be slow over the next two years. But one could imagine a faster adjustment, especially if it were aided by a stronger dollar and by weaker oil prices. So there are reasons for thinking that the adjustment would be faster, but it’s also possible that some of the recent incoming data have given us a bit of a head fake. Maybe we’re not quite as far along in the process of getting back to 2 percent, and maybe we’re too optimistic in that regard.

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