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

Yes, that was with FRB/US. I would say that Karen, if she were to run FRB/Global, might come up with slightly different estimates, but we do see that as an important element. Now, in terms of explaining the difference between the implicit equilibrium funds rate in the staff forecast and that which FRB/US would produce, a couple of things stand out. One is that interest-sensitive spending in the judgmental projection looks soft relative to what the model would expect. Interestingly enough, that’s surprisingly so in household interest- sensitive spending; the model wants to see considerably stronger housing investment and also stronger consumer durables. The model also thinks that—take it for what it’s worth—the stock market should be stronger and the exchange rate should be weaker. Those actually are the three most important components of the difference in how we see the outlook from what the model would expect. In both cases of projecting asset values—for both the stock market and the exchange rate—we’ve taken a sort of neutral approach to the forecast. But there are reasons for being skeptical about that going forward.

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