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

Thank you, Mr. Chairman. I appreciate your passing out this sheet and talking about it. I think the lesson here is that these things do not always go as gradually as forecast, and once things get going in one direction, there is more momentum than is built into our longer-term forecasts.

In terms of policy, as you know I would have preferred raising rates at our last meeting, and I think the overall contours of the resource gap and the inflation forecast are pretty much the same as they were last time. I still think that policy will need to be tightened further to bring inflation back into my comfort zone within a reasonable period of time. But given our decision to pause last month, I do not feel that we should move today. We told the public that we paused to assess incoming data, and I think it requires more than one meeting’s worth of data to assess that. In fact, if we did move today, it would be a signal that we are just reacting to little snippets of information, and we are trying to dissuade people from thinking that. But I am concerned about how markets viewed our last meeting. We talked last time about a hawkish pause. Generally the markets didn’t interpret it that way. They may be more optimistic about inflation, but as we know, the futures market is expecting us to cut rates. I share a sense of what President Poole talked about—that market analysts and others are saying that we are not really serious about this 1 to 2 percent that many of us have talked about; they think our zone is somewhere higher.

So when you look at these options from A to Z—A to C [laughter], there are lots of options—that Vince has distributed, I am in the B+ category. But I think we should not put that phrase “policy is more likely to firm than ease going forward” in the statement. However, I think that it is the sense of this Committee, and I think it should be reflected in the minutes.

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