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

I believe the staff still considers potential to be in that range, and I think all of us generally understand that that’s what we mean here. The reason we’ve chosen this language is that we’ve been using these words for a long, long time. They go back to the era of the Humphrey-Hawkins legislation. In my view, it’s better for us to stick with those words rather than to say a growth rate about equal to potential because that clearly begs the question of what we think the rate of potential is. The word “sustainable,” at least to my ear, has an implication of a pace of economic growth that, as the Chairman suggested, does not contain the seeds of its own destruction. It means growth that is not too slow, which is what we have now, nor so far above potential that we risk a breakout of inflation. Admittedly it’s shorthand. But I don’t think it’s that mysterious that we need to tie ourselves in knots about it today. To make the point again, this little swan that we tried to hatch a few years ago may need to have some plastic surgery. But I’m not sure that today is the day we ought to look closely at this because what we mean by sustainable growth is not the issue that has tripped us up with respect to this whole concept. At least I would argue that. You may disagree.

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