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

All right. My basic view, Mr. Chairman, is that we should keep the fed funds rate unchanged. Circumstances justify a very modest softening of the signal in the statement. I don’t think we should do that by changing the balance-of-risk assessment. I think we should do it by acknowledging very subtly that things have turned out slightly softer than perhaps we expected and that we might have a little more uncertainty going forward. The virtue of Governor Bies’s suggestion is that it acknowledges uncertainty, and the combination of the acknowledgment that the downturn in housing has been substantial and the phrase indicating some uncertainty about the future is pretty good. So I’d be comfortable with that. President Poole made a very good case for the importance of reminding ourselves that we need to make sure we have some flexibility going forward to react to a material change in the outlook. But I don’t think we’ve had enough changes to our outlook to justify a substantial change in the signal at this point. To go to a balanced risk assessment or to go substantially further toward one would likely induce some larger change in market expectations and some greater easing of financial conditions than we have already seen. That is not something we need to induce at this time, principally because of our uncertainty about whether we’re going to get enough moderation in inflation. So I would be comfortable with “recent indicators have been mixed.” I think I’d slightly prefer that to going to alternative C, section 2, and I would prefer both of those to alternative B in either exhibit.

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