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

Mr. Chairman, I have just a comment. We’ve discussed the probability of deflation quite a bit today, and a lot of attention was focused on the 35 percent probability in the Board staff’s exercise. In answer to Tony’s comment about the time period used in that simulation, I would note that we did do the exercise beginning in 1985, which is a much more tractable period, and the probability we got was 20 percent as I indicated. It strikes me that both of those exercises suggest that the probability of deflation is higher than I think we’re all comfortable with.

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