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

Mr. Chairman, I think a good case could be made for a further easing of policy today. The most likely scenario for the economy over the next year or so leaves significant excess capacity in place. With low inflation and the economy in a weakened state, I believe that erring on the side of ease most likely would entail very little cost whereas erring on the side of inaction could be significantly more costly. The cost of inaction could be especially large because we are within range of deflation and the zero bound. Finally, I believe that being preemptive has served us well in the past. Quite frankly, if my recollection is correct, at times our acting in a preemptive manner has involved surprising the markets, and I don’t think we’ve suffered as a result of that.

I also would say that the third paragraph is helpful to me. Let me make a few comments. I never thought when we talked about the upside and downside risks that it was in terms of commenting on sustainable growth. It always meant to me the risks to our forecast of growth— that we saw either upside or downside risks to our projection of growth, not to sustainable growth, which I think is a very different concept. Also the last two sentences help me a bit because they do point out clearly the issues that I think we ought to be focused on, particularly if we’re still interested in acting in a preemptive way. Thank you.

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