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

Thank you, Mr. Chairman. I feel that current policy is about right, given the risk to the economy and the potential that inflation will not turn down in the near term. Thus I would favor no change at this time. We’ll get further readings on employment before our next meeting, and we’ll also know about the level of spending that is likely to occur over the holidays. Although it’s doubtful that we’ll have a clear reading in January on the future direction of housing, the additional data will perhaps provide us with some clue as to how long and how deep the downturn will be for this sector. The longer the downturn in the housing sector continues, the greater the potential for spillover into other sectors, creating the potential for some easing in the relatively tight labor markets that we’ve all talked about today. That said, my own take is that, without some significant spillover, we should be on track for a soft landing.

As far as the wording is concerned, I’m not sure how many options we’ve got on the table, but I would prefer alternative B, dropping the “more than anticipated.” I’d be a little cautious about introducing a new phrase, whether it’s production or spending, because we might have to specify what spending. I think we’re talking implicitly about business spending, but we have to remember that the consumer sector has held up quite nicely for us. So let me just stop. I prefer alternative B in exhibit 4, and I would drop “more than anticipated.”

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