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

I think the language is obsolete now. There’s no question that it needs to be changed. We need to eliminate the wording on the risks. I would have preferred to do the surgery on the swan—or whatever the analogy is—outside of this group. I’d suggest that another subcommittee be appointed to do that and to come back to the Committee with a recommendation. For many of the reasons that people have mentioned around the table, I think there will be other iterations of this and we are setting some precedent here, and I think it’s something we should consider very carefully before changing.

I actually would propose another option. I don’t feel strongly enough to dissent on the statement, but I want to suggest another option because I do have concerns about this statement. My concerns tie in with some of the comments made by Jack Guynn and others. First, I think this statement will surprise the market and will increase the market expectation of a cut in rates. In my view, it comes close to risking the effect on market sentiment that we wish to avoid here. Second, I think it elevates the concern about disinflation significantly. So my preference would be—and to my mind this option would have the least risk of influencing the markets—to go back to our usual format and to say that the risks are balanced. However, I would add the sentence that you put in regarding the unwelcome risk of disinflation. I’d put what you said in your testimony in the statement itself to show that we are concerned about it. But I still would prefer to have the risks balanced. As I said, I don’t feel strongly enough to dissent on it, but that would be my preference.

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