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

Mr. Chairman, I had my hand up rather quickly, although Norm didn’t see it, because I was looking forward to supporting what I thought would be Don’s recommendation to keep the “considerable period” language. But I can accept your recommendation. This is a tough issue, and I think you made some very persuasive arguments, especially at the end of your statement. But let me just comment very quickly. I agree that most of us are now much more optimistic about the outlook, though I may not feel quite as strongly as you do. But I do believe that the supply-side issues that Don discussed and that are raised in the forecast are significant or at least not insignificant. Also, we talked a little about downside costs. As you know, there is a probability and a cost. I agree that the probability of further disinflation may be lower than a move in the opposite direction, but I think it’s important not to underestimate the cost if in fact we do have further disinflation. We have the funds rate at 1 percent. I’m not confident that we are fully prepared yet to deal with the kinds of policy issues we would have to deal with if we got a bigger disinflation move than we now anticipate. So if it were my call, I would leave the “considerable period” language in the statement a little longer. But again it’s a close call, and I could certainly accept your recommendation.

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