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

Well, if we’re talking about growth that is close to potential and doesn’t contain the seeds of its own destruction—i.e., it’s not inflationary and is not straining resources—my own view is that there are more downside risks to that forecast in the near future than upside risks. One can debate that, I suppose. There is certainly the possibility of a fall in inflation, and I like the delinking of growth and inflation in this statement, so I guess I can live with it.

With regard to the June agenda, I would hope that we don’t talk just about strategies to deal with the zero bound issue. We had an extended discussion of that at a meeting not too long ago, so there is considerable material available to us on that issue, and all of us have thought a lot about the zero bound. We do need strategies, I agree, and we need to think about them in the environment in which we might actually employ them. But in my view it also would be worthwhile to explain the concept that people have raised here. I think President Stern was the first to say a couple of meetings ago that all price declines are not necessarily bad. What does that mean? What is the distinction between disinflation and deflation? What does it really mean to operate in such a low interest rate environment separate from whether we buy securities out on the yield curve or whatever? Are there other factors that we haven’t given a lot of thought to that are going to affect us or the economy in such an environment? Maybe that’s too much!

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