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

We have heard different things from different market participants. The Bond Market Association met in this room just last week and devoted one segment of the session to complaining about the balance of risks statement as not being helpful. They indicated a preference that we be a little more descriptive in the statement. But I think that would result in some confusion because right now the balance of risks statement provides the comfort of giving coded words. The problem is that the codes are a limited number of choices, and at least some members have complained that they have constrained your ability to convey what you really think about the near-term outlook. For example, in today’s case you might say that plausibly under the language of the last three years, you’d have to state that the risks are tilted toward economic weakness, whereas in fact most of the members have expressed concerns about further disinflation from an already low level. So I think expanding the risks assessment on balance—I hate to use the word “balance”— [laughter] on net would provide more information to the markets and more flexibility to you going forward. But flexibility comes with a cost. You don’t have those coded signals.

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