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

I wanted to ask you about this “less inflation persistence” alternative scenario, which as you said brings inflation down to 1.6 percent by 2008. As I read the Greenbook and then the alternative simulation memo, I saw two things—(1) less persistence and (2) an expected inflation outcome of 1.6 percent. It seemed as though that outcome was built into the scenario; and I was wondering, given that we have had core inflation over 2 percent for more than two years now, whether that is a reasonable assumption to put in there. What would the outcome look like if you had built into that scenario an assumption of 2 percent instead of 1.6 percent?

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