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

Thank you, Mr. Chairman. I, too, favor no change in the federal funds rate today and agree on the risk assessment in section 4. Let me make three points. First, I think that there is a rebuttable presumption—particularly in December, given what’s going on in the markets—of somewhat less liquidity and somewhat less interest in surprises now than at other points that favors fewer changes rather than more. Second, I think your remarks, Mr. Chairman, the Vice Chairman’s remarks, and several people’s remarks over the intermeeting period have focused on uncertainty and have tried to challenge the markets about their degree of certitude regarding what’s likely to happen. When I review the language, I try to keep that in mind and reinforce the view that they need to be doing their own homework and to be thinking about what the tail risks are. Third, it’s not our job to force our forward curve of interest rates to match the markets, but I’d rather not reinforce their views either.

So when I turn to the language, my preference is to agree with President Minehan’s alternative C. But we’ve been whispering about Governor Bies’s compromise over here, and just to make the words even briefer, a suggestion for the wording is, “Although recent indicators are mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters.” This wording acknowledges what’s going on in the markets, Mr. Chairman, and so it captures what you rightly said about our continuing to pay attention rather than having a knee-jerk reaction. At the same time, it doesn’t put more of an emphasis on data on either side of the line. That strikes me as a reasonable compromise, given all that I’ve heard today. Thank you.

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