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fomc
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Thank you. President Fisher.
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Mr. Chairman, I spoke of my concern about the fattening of the tail in economic weakness and my continuing concern about the already fat tail of inflationary pressure. However, if I come around to the view of the staff and the view that seems to be expressed by many at this table--that growth is likely to return to its...
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President Minehan.
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Thank you very much. My assessment of what's going on vis-a-vis our policy stance is that we're facing, as I think most people have acknowledged around the table, pretty much the same ideas that we were facing at the last meeting about the best baseline forecast going forward; but the risks on both sides have gotten a ...
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Thank you. President Poole.
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Thank you, Mr. Chairman. I support an unchanged fed funds rate target. However, I strongly favor a symmetrical balance-of-risk statement because I believe that we will then be well served by market responses should incoming data differ from our current expectation. That was certainly the case when long-term interest ra...
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Thank you. Governor Kohn.
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Thank you, Mr. Chairman. I agree that we should keep the federal funds rate where it is. I think that's our best chance of achieving various goals that we've all set here, relative to changing it in either direction. I do think the risks remain unbalanced. I'm in favor of keeping the current section 4. I agree, Bill, t...
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Thank you. President Pianalto.
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Thank you, Mr. Chairman. I support maintaining the current federal funds rate target today, and I can support the language in alternative B. I'm trying to decide between the holiday language and the original, and I'm struggling with the "weaker than anticipated." So I agree that, if we remove it, I would be comfortable...
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Thank you. First Vice President Barron.
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Thank you, Mr. Chairman. I feel that current policy is about right, given the risk to the economy and the potential that inflation will not turn down in the near term. Thus I would favor no change at this time. We'll get further readings on employment before our next meeting, and we'll also know about the level of spen...
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Mr. Chairman?
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Yes.
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I have a clarifying question raised by Pat's question. Please remind us, Dave--has real consumer spending slowed more than anticipated?
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No. Real household consumption has been exactly as expected and has not shown any signs yet of slowing. Business spending, on the other hand, has been slowing in equipment and somewhat in construction.
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The spending side of the national income and product accounts is really the unspoken implication.
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The other difference between exhibits 4 and 5 is "weaker" versus "subdued." Does "subdued" sound weaker than "weak"? [Laughter] Or is "weak" weaker than "subdued"?
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Maybe Michelle can tell us the answer to that. [Laughter]
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I still vote for section 2 of alternative C.
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President Minehan has a clean solution. President Yellen.
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Thank you, Mr. Chairman. I think the pause initiated back in August is paying dividends. We've been able to gather valuable economic intelligence at no discernible cost to FOMC credibility. Given the recent signs of weakness in economic activity, I do think the downside risk to the outlook has intensified. A further ra...
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Thank you. President Moskow.
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Thank you, Mr. Chairman. First, I want to thank the staff for including chart 6 in the Bluebook. As several of us suggested last time, it's a good addition to have for every meeting. Since August, policy has been on hold for us to assess the inflation situation and the growth outlook, and at this point I think we would...
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Thank you. President Stern.
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Thank you, Mr. Chairman. I take my cue from the earlier observation that we have received a lot of additional data but not much additional information, and I agree with it. So, first of all, I favor no change in the federal funds rate. I think that has been appropriate for a while, and I think it continues to be approp...
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President Stern, are you advocating exhibit 4 about growth as opposed to exhibit 5 with the indicators?
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Yes.
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Thank you. President Lacker.
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In past meetings I have expressed my misgivings about whether our strategy is going to bring inflation down fast enough. So I won't belabor those again today. As I said earlier today, the inflation picture has, if anything, eroded a bit. So my misgivings remain. The outlook for real growth could conceivably weaken enou...
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President Plosser.
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Thank you, Mr. Chairman. I, too, favor maintaining the federal funds rate at its current level at this point. As many people have said, the incoming data have been voluminous but not very informative. However, inflation continues to be higher than I'd like to see it and is forecast to remain so for longer than I'd like...
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President Plosser, the communications subcommittee will help us solve that problem. [Laughter] Governor Bies.
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Thank you, Mr. Chairman. I support leaving the rate unchanged today because I still believe that the risks are to the upside on inflation and so we need to persevere at this level for a while. In terms of the wording, I want to offer another alternative. [Laughter] I'm concerned that in exhibit 5, alternative B, we've ...
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President Minehan.
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Let me put in another plug for section 2 of alternative C: "Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market." Why do you want to go on and on about it?
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That's what we're paid to do. [Laughter]
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Let me just say what the logic is behind it. The logic is that we'd like the markets to know that we are awake, [laughter] we are watching the data, we have seen things coming across the transom, but nevertheless, we have the following views. Perhaps the logic is not good, but that's the reason.
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I can understand the logic, but I wonder whether "substantial" does that enough for us. That's the only question I would pose.
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Okay. Thank you. Governor Warsh.
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Thank you, Mr. Chairman. I, too, favor no change in the federal funds rate today and agree on the risk assessment in section 4. Let me make three points. First, I think that there is a rebuttable presumption--particularly in December, given what's going on in the markets--of somewhat less liquidity and somewhat less in...
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Thank you. Governor Kroszner.
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Given that the avalanche hasn't really moved our assessment very much, I certainly don't see any reason to move interest rates now. I think it is important to acknowledge in section 2 some of the slowing that we've seen. As we have discussed, there are two ways to do that. One is to include the substantial cooling of h...
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Thank you. Governor Mishkin.
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Given the discussion today, there really is no reason to change our stance in policy or change my views on policy. There is a bit more uncertainty, so I think the word "vigilance" is important. Then we need to be able to move quickly, and it's not clear to me that we are necessarily talking about quickly in terms of lo...
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Thank you. Vice Chairman Geithner.
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May I begin with a question? When was the last time we used the phrase "indicators have been mixed"? Is there precedent for that?
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I thought you were going to ask about "smidgen." [Laughter]
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In the past the Committee has often referred to "intermeeting data," for example.
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As being mixed? It's probably true that at any time the indicators are mixed, but does this phrase have substantial connotations based on precedent?
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I don't think so.
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All right. My basic view, Mr. Chairman, is that we should keep the fed funds rate unchanged. Circumstances justify a very modest softening of the signal in the statement. I don't think we should do that by changing the balance-of-risk assessment. I think we should do it by acknowledging very subtly that things have tur...
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Thank you.
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Mr. Chairman, I think we have just been to North Dakota. [Laughter]
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I would say we crossed the border. [Laughter] Well, let me try to summarize. [Laughter] First of all, the economy is still on the course that we have been projecting for some time. A soft landing scenario with some slow but, I hope, decided reduction in inflation seems to be a reasonable expectation. However, there sti...
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That's fine.
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Is there a comment?
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I'll be reading the directive and risk assessment from page 23 of the Bluebook. "The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee in the immediate future seeks conditions...
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Thank you very much. We have one more item--on communications. I'm going to turn over the floor to Governor Kohn.
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As we get ever deeper into North Dakota here, [laughter] I don't know what President Stern thinks about this.
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I was going to say that I'm the only one here, on the Committee anyway, who gets there with any frequency, and people have suggested that I should defend North Dakota. But I must say that I felt the joke was apt. [Laughter]
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Getting back to other communication issues, I have, first, a bit on the January meeting. Our January meeting will be another two-day meeting, and part of it will be on communication issues. This one will be on forecasts. What can we do to improve the way we communicate our outlook about the economy--really the medium-t...
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President Hoenig.
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I agree. I can't imagine putting a position out in public. I'm concerned that I do get questions: "This has been in the minutes. What do you think?" I feel a little uncomfortable just saying, "I'm not going to talk to you about that." I feel more comfortable saying, "That's a tough issue. We've gone back and forth. We ...
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I would not interpret Tom's "no comment on the issue" to be inconsistent with what you were proposing, Don.
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Right. I think we can talk about it without giving a position. I mean, when people have asked me, I've said, "There are a number of things under consideration. There are a lot of issues here that we need to work through."
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I feel very comfortable without giving out, "This is what we ought to do," and that sort of thing. That's helpful.
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I think there's a fine line here. It's extremely important for us not to be taking positions, exactly along the lines that have been suggested. But there is a question about educating the public about the issues, not about the specifics. Because of the fine line, I'm not sure how we should think about this question: Wh...
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President Poole.
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I'd just like to point out that we can respond to questions by pointing to the brief mention in the minutes that the Committee has been talking about communication issues. We can also remind people that the details of the proceedings are confidential until they are released in the minutes, the statements, testimony, an...
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President Plosser.
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I'd just like to echo both of those points, which makes this issue in some ways much more subtle and difficult to pull off. I agree with Rick 100 percent. Part of our job here is education. We have to walk the line between talking about the subtleties of monetary policy and issues that confront us and educating the pub...
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Let me say just a few things. First of all, the freedom of individual members to speak is a very important value. We are not trying in any way to suppress that. Second, I agree with Governor Mishkin that the education process is very important. Third, I would say that past positions are past positions, and no one is as...
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Actually, I think Vice Chair Geithner was slightly ahead of me.
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No, go ahead.
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Thank you. I think Don's and your points, Mr. Chairman, are very well made. Coming at this maybe from a little different perspective than a lot of people do, I think there's a lot we can say about what the Committee has already done in the realm of communications. The big watershed was in 1994--in actually telling peop...
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Vice Chairman Geithner.
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Let me just say a couple of things. I think Rick's point about education is right. You can make a statement educating people about the virtues of price stability and anchoring long-term inflation expectations and the reason that's important, without taking on the challenge of educating people today about alternative wa...
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President Fisher.
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Just very quickly, I think what's clear from this discussion is that, in dealing with the issue of inflation targeting, there's no need to be on the offensive. The issue is how we handle the defensive--and I think Vice Chairman Geithner's point is correct--if we talk about the ends and desires of monetary policy rather...
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Thank you. Let's bring this discussion to an end. Everyone has to use his or her own judgment, but we just wanted to bring to your attention some of these considerations as you think about your public appearances. The date of the next meeting is January 30 and 31. The meeting is now adjourned.
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Good afternoon, everyone. Let me be the first to welcome Bill Dudley to the table.
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Thank you. [Applause]
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Today is our annual organizational meeting, so we have a few items to take care of.
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I'll start, if that's okay with you.
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Go ahead, Governor Kohn.
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Before we get illegal here, I am honored and pleased to nominate Ben Bernanke to be Chairman of the Committee.
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Thank you. Objections? [Laughter]
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I need to interrupt again.
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Yes.
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I am as pleased and as honored to nominate Tim Geithner to be Vice Chair.
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Are there any objections? Thank you very much. Ms. Danker, will you read the list of staff officers of the FOMC.
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Secretary and Economist, Vincent Reinhart; Deputy Secretary, Debbie Danker; Assistant Secretary, Michelle Smith; Assistant Secretary, Dave Skidmore; General Counsel, Scott Alvarez; Deputy General Counsel, Tom Baxter; Economists, Karen Johnson and Dave Stockton; Associate Economists from the Board, Tom Connors, Steve Ka...
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Thank you. Are there any questions or comments? Approved without objection. Next on the agenda is a proposed change to Committee rules. We received a memo from Scott Alvarez and Debbie Danker, which concerns how a backup would be appointed in case the Desk Manager was unable to serve. Are there any questions for our co...
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I have a question. It has nothing to do with the changes, but something struck me this morning as I was reviewing this material again. Let me refer you to the FOMC's Rules of Organization, page 1: "If a member or alternate ceases to be a president or first vice president of a Reserve Bank, a successor may be chosen in ...
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Our General Counsel can probably comment on that, but I can try.
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There's a little lawyer in all of us. [Laughter]
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I believe the election that statement refers to is if a new president is appointed and that person is then elected as a member by the boards of directors of the three Reserve Banks, he or she would serve until the next annual election at this time of year, at which point the successor would be elected from one of the o...
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Then I was not reading it correctly; but you understand where my confusion came from.
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That's exactly right.
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