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

My preference is, as we look at the outlook, to maintain the federal funds rate at 5¼ percent. In my judgment, Mr. Chairman, our current policy stance is slightly or moderately restrictive and will lead to moderation in inflation going forward, though slowly I admit. But I will also say, as indicated in my earlier statement, that I believe there are some upside risks to such moderating inflation. Therefore, I believe that we should maintain a slightly restrictive policy stance until we see core CPI inflation at 2 percent or lower. I would also say that my view of policy going forward is more asymmetric. If we get evidence that inflation is not moderating, I would be prepared to support additional tightening. On the other hand, it would take a prolonged period of below-trend growth with little sign of a return to trend or a much larger slowdown in growth to convince me that we should ease policy. On the press statement, I’m inclined toward saying less than we’re saying now. I still think we ought to leave more to the minutes and say less in the statement. But having said that before and not getting very far, I would go with alternative B, more in line with some of the language that you and Cathy may work out here. Thanks.

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