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fomc | 2,007 | Thank you. President Fisher. | 6 |
fomc | 2,007 | Mr. Chairman, I was a bit loquacious yesterday and apparently, for some, too anecdotally explicit, if not excessive. [Laughter] So I'll be less frisky this morning, shorter, and more to the point. I support alternative B. I don't want to wordsmith it. The only word I would want to add, which I won't get, is "worldwide,... | 116 |
fomc | 2,007 | No problem, President Fisher. Thank you. President Yellen. | 13 |
fomc | 2,007 | Thank you, Mr. Chairman. I support Bluebook alternative B. I think we should maintain the current stance of policy because it is likely to foster an economy that gradually moves toward a soft landing. At the same time, the upward bias in the risk assessment is consistent with my view that upside risks do predominate fo... | 382 |
fomc | 2,007 | Thank you. President Pianalto. | 7 |
fomc | 2,007 | Thank you, Mr. Chairman. I support no change in the federal funds rate today. From our comments yesterday, it appears that not much has changed in terms of our outlook for growth and inflation. So I'd prefer to make only the changes to our statement that are necessary to keep us current with the intermeeting data repor... | 276 |
fomc | 2,007 | Thank you. President Minehan. | 7 |
fomc | 2,007 | Just an interjection--I would also like to be on record as not assuming that the Committee has an explicit objective. Individuals around the table have indicated comfort zones of one range or another, but as far as I know the Committee has no explicit objective. We all want to have the best policy we can for inflation ... | 70 |
fomc | 2,007 | I tried to qualify my comment with as many qualifiers as I could: I didn't mean to imply that the Committee had an implicit objective. | 27 |
fomc | 2,007 | Thank you. | 3 |
fomc | 2,007 | President Pianalto. | 4 |
fomc | 2,007 | I agree. I was commenting on my own outlook. Because of some of the differing assumptions that we talked about yesterday, I just didn't want to be in the camp of a 2 percent objective. | 40 |
fomc | 2,007 | Thank you. President Moskow. | 7 |
fomc | 2,007 | Thank you, Mr. Chairman. I agree with the sense of the Committee that we should not be raising rates today. However, I do think that, as we've all said, the inflation risks still dominate and that we're approaching some very important decision points in the next couple of meetings. If we look back, of course, the prima... | 444 |
fomc | 2,007 | Thank you. President Stern. | 6 |
fomc | 2,007 | Thank you, Mr. Chairman. As I commented yesterday, it seems to me that developments, in terms of both real growth and core inflation, have been positive recently, and I would say the same thing about the outlook. Against that background, I think that maintaining the federal funds rate as in alternative B is the appropr... | 273 |
fomc | 2,007 | Thank you. President Lacker. | 7 |
fomc | 2,007 | Thank you, Mr. Chairman. By way of preface--I didn't mention this yesterday, but my semiannual forecast projects core PCE inflation falling to 1.6 for '08, and growth rising from 2.6 to 2.9 in '08. This represents both a more-rapid return to price stability and a higher rate of trend growth than provided in the Greenbo... | 518 |
fomc | 2,007 | Vice Chairman Geithner. VICE CHAIRMAN GEITHNER I'm not sure I understand, Jeff. With regard to section 4, what is your preference? | 34 |
fomc | 2,007 | President Minehan's suggestion. | 6 |
fomc | 2,007 | Yes. President Minehan. | 6 |
fomc | 2,007 | This is the problem with editing on the fly. I had recommended that you go directly from "the Committee judges that inflation remains the predominant concern" to the next sentence--"Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth"--and so on. However, leaving... | 162 |
fomc | 2,007 | It's a fair point. I'd agree with that. | 10 |
fomc | 2,007 | I take my suggestion off the table. | 8 |
fomc | 2,007 | I withdraw my support for your previous suggestion. [Laughter] | 13 |
fomc | 2,007 | You can't withdraw it; she's not making it. [Laughter] President Lacker, please just say a word about how we are linking energy prices and core. In our public remarks--for example, my speeches on energy--I have talked about the importance of unlinking those two. | 58 |
fomc | 2,007 | Yes, indeed. But if you just plot the two for the past year and a half, you see a kind of two-month or three-month echo into the core. You calculate the cross correlations. They were pretty high before 1984; they were low from 1984 to 2001. They've been high again since. My reading of the financial press coverage of ma... | 238 |
fomc | 2,007 | Governor Kroszner has a two-hander. | 11 |
fomc | 2,007 | A two-hander on the now-disgraced proposal on section 4. [Laughter] I think the way to raise it back is just take the phrase "the Committee judges that inflation remains the predominant concern" and then move on to the sentence in alternative B that starts with "the extent and timing of any additional firming." | 68 |
fomc | 2,007 | We could definitely do that. | 6 |
fomc | 2,007 | If you want to keep it, I think that's the way to bring it back to grace. | 19 |
fomc | 2,007 | President Moskow has an intervention. | 7 |
fomc | 2,007 | I was going to make exactly the same suggestion--to put it on the table for consideration by President Minehan. [Laughter] | 27 |
fomc | 2,007 | It also has the virtue of minimizing the number of word changes and just substituting a phrase from the minutes from last time, for those of you who think that's the best way to go. | 38 |
fomc | 2,007 | But I just raise a question, for those who are making the suggestion, because I'd like to hear your response. In saying that inflation is the predominant concern, we are acknowledging more explicitly than we have before that we have other concerns. That is, we're in some sense bringing into the assessment the presumpti... | 127 |
fomc | 2,007 | I think several of us have used the "predominant concern" language, so I don't see it as likely to induce a dramatic change in assessment about our views. | 34 |
fomc | 2,007 | President Minehan. | 4 |
fomc | 2,007 | The language that we have had for some time has shown concern about cooling as a result of the housing market. Whether we have explicitly referred to it as a concern or not, clearly it has been a concern. I think that "predominant concern" is a bit stronger than "some inflationary risks remain" and that such language c... | 105 |
fomc | 2,007 | Well, no, I'd just make the observation that we debated this before and we debated several times the question about whether the best introductory phrase to that balance of risk assessment was exactly that language. The problem in doing it now--this is just one man's view--is that I think it will be read as a significan... | 169 |
fomc | 2,007 | I couldn't have framed it that way. [Laughter] | 12 |
fomc | 2,007 | But I think we haven't changed our view of the outlook enough to justify that significant a change in the signal. | 22 |
fomc | 2,007 | Intervention, President Fisher. | 6 |
fomc | 2,007 | Mr. Chairman, I think we have to do this against the background of what we said the last time. If you go back to section 2 from December, we were cautious about growth. In section 2 under alternative B now, we're basically saying that we are seeing firmer economic growth. I don't want to overdo this, and I think Vice C... | 160 |
fomc | 2,007 | Governor Mishkin. | 4 |
fomc | 2,007 | Let me also support Tim on this. I have a slightly different slant here, which is that the inflation numbers have actually come in better. The concern here is that the economy is coming in stronger and that it may necessitate tightening. But we don't want to give the impression that we think the inflation numbers are w... | 92 |
fomc | 2,007 | Vincent. | 3 |
fomc | 2,007 | May I just make one observation, Mr. Chairman? When you move from B(4) to C(4), you make another change as well. B(4) talks about inflation risks, whereas C(4) talks about inflation. So you are changing. You're actually indicating distaste for the current level of inflation, whereas the previous one could be read as "o... | 88 |
fomc | 2,007 | Alternative C, section 3 does the same thing. | 11 |
fomc | 2,007 | That's a good point. | 5 |
fomc | 2,007 | Any other interventions? | 4 |
fomc | 2,007 | Mr. Chairman. | 4 |
fomc | 2,007 | President Hoenig. | 4 |
fomc | 2,007 | Just to clarify, I'm assuming then we're floating back toward alternative B, leaving the fourth section as is. | 21 |
fomc | 2,007 | Oh, you can speak for yourself. [Laughter] | 12 |
fomc | 2,007 | Oh, I like that, but I'm not sure that's where we landed. [Laughter] | 19 |
fomc | 2,007 | Okay. I think we're going to have to assert order here. Any other interventions? President Moskow. | 21 |
fomc | 2,007 | I would just say that I'm comfortable with going back to alternative B, section 4, but one way to help move this forward would be just to strengthen our concern in the minutes about inflation and stick with B(4). | 45 |
fomc | 2,007 | Thank you. President Poole. | 7 |
fomc | 2,007 | Thank you, Mr. Chairman. First of all, I do favor an unchanged fed funds rate target. I prefer sections 2 and 3 from alternative C. As I read the conversation around the table, I don't hear anyone saying that we need to prime the markets for a probable increase in the fed funds rate in March. Possibly in June is my sen... | 644 |
fomc | 2,007 | Thank you. Governor Bies. | 7 |
fomc | 2,007 | Thank you, Mr. Chairman. I favor keeping rates unchanged today, and I favor the language in alternative B in all the sections. Trying to be cautious, looking at the numbers that just came out, and reflecting back to yesterday's discussion about the NAIRU, last night I looked some more at the exhibit 5 that the staff pr... | 470 |
fomc | 2,007 | Thank you. Governor Kohn. | 7 |
fomc | 2,007 | Thank you, Mr. Chairman. Like the others, I favor maintaining the federal funds rate at its current level today. As President Plosser pointed out, the strength of the data on employment and spending does imply a higher natural real rate. At the same time, the inflation data have come in really more favorable than we ex... | 860 |
fomc | 2,007 | Thank you. Governor Warsh. | 7 |
fomc | 2,007 | Thank you, Mr. Chairman. Let me spend a minute talking about a market issue before turning to the language. We've talked a bit and Vincent talked a bit about option-implied measures of uncertainty about the policy path, which are near historical lows. That's certainly the case now, and it was the case when we last met.... | 421 |
fomc | 2,007 | Thank you. Governor Kroszner. | 9 |
fomc | 2,007 | Thank you. I, too, support alternative B and maintaining the federal funds rate at 5.25 percent. I agree with many of the arguments that were made before, and so I won't repeat them. I'll go to the language. On section 2, I think it would be an overreaction or appear to be an overreaction to the current data if we sudd... | 379 |
fomc | 2,007 | Thank you. Governor Mishkin. | 7 |
fomc | 2,007 | I have a slightly different take on where the economy is in that I think the inflation numbers we have seen recently are likely to be reflecting something that's actually happening. So I'm a little more sanguine on the inflation front than I was before and than the Greenbook is. I don't see inflation risks on the upsid... | 407 |
fomc | 2,007 | Thank you. Mr. Vice Chairman. | 8 |
fomc | 2,007 | Thank you, Mr. Chairman. The most important thing for us to do today, and it's really the only thing we need to do, is to convey a sense that, on the basis of recent data, we see somewhat less downside risk to growth and maybe somewhat less upside risk to inflation. But the principal issue we face is whether we're goin... | 272 |
fomc | 2,007 | Thank you. Thank you all for your insights. My recommendation also is to take no action and to maintain a bias toward further tightening. I have heard very clearly the Committee's concerns about inflation risk, and I recognize that we may have to take further action in that direction later this year. I would counsel pa... | 1,050 |
fomc | 2,007 | I have one question here. Do we intend in the minutes to make clear our general--well, "expectation" is too strong--but tilt or bias in the direction of tightening later in the year, which I think matches what you just said. | 51 |
fomc | 2,007 | President Poole, I responded to something that you said in the go-round. I think the language of alternative B, section 4 is not saying that we're about to move at the next meeting. It says essentially that the next move is more likely to be up, but it's very clear that "extent and timing" could mean that it will be so... | 112 |
fomc | 2,007 | My question had to do with the coordination between the statement and the minutes--whether we're going to indicate clearly in the minutes the sense around the table about that tightening. My sense was that we viewed tightening later in the year as more probable than we did certainly in December. That's all I'm asking a... | 60 |
fomc | 2,007 | Vice Chairman Geithner. | 6 |
fomc | 2,007 | I'm not sure we've done this consciously, but the way the discussion in the minutes has evolved in the past several cycles is that we've made an effort not to provide more nuance in the policy signal that is in that last paragraph. In fact, we've adopted the simplifying convention of pretty much repeating the part of t... | 213 |
fomc | 2,007 | President Hoenig. | 4 |
fomc | 2,007 | First of all, I'm fine with your proposal. I would have gone with the other proposal, but neither set of language binds us, and that is the main thing that I agree with. That brings me to President Poole's point. I don't have a sense that we have a great increase coming later in the year, and I don't want to convey tha... | 165 |
fomc | 2,007 | President Lacker. | 4 |
fomc | 2,007 | There are differences of views about this around the table. A couple of people have said that they think it's likely that sometime this year we will think hard about raising rates. I would trust that such views would be reflected in the minutes. Is it your understanding, Vice Chairman Geithner, that our convention rega... | 92 |
fomc | 2,007 | I don't think it's a problem regarding that penultimate paragraph of the minutes, in which the staff tries to capture the texture of what people say about their thoughts on what policy is likely to do. But in the basic framing paragraph at the end, which is designed to capture whatever we as a Committee are willing to ... | 121 |
fomc | 2,007 | President Minehan. | 4 |
fomc | 2,007 | The issue that President Poole raised was whether the minutes would likely be out of sync with the statement. What Vice Chairman Geithner mentioned and I know to be the case is that the last paragraph of the minutes is always the statement. So while the minutes might have a nuanced discussion and possibly tilt a bit to... | 166 |
fomc | 2,007 | Thank you. Governor Kohn. | 7 |
fomc | 2,007 | Thank you. President Minehan said much of what I was going to say. The minutes will indicate the tenor of the discussion, which was that, despite some good inflation news, we still see plenty of upside risk. That will convey the basic view here. I'd be very concerned about being explicit about an interest rate increase... | 135 |
fomc | 2,007 | President Moskow. | 4 |
fomc | 2,007 | I thought, Mr. Chairman, that you described a convention a number of meetings ago, and I thought you expressed it very well: The statement that comes out of the meeting is a consensus statement of the Committee; the minutes describe the range of views that are expressed. That's consistent with the way we've been operat... | 72 |
fomc | 2,007 | I agree. | 3 |
fomc | 2,007 | May I ask one other question? | 7 |
fomc | 2,007 | President Moskow. | 4 |
fomc | 2,007 | I just was wondering, since we're focusing on alternative B, how the staff thinks the markets will react to the current version. | 25 |
fomc | 2,007 | As we related in the Bluebook and as a number of you said, market participants understand the risk assessment, and they don't expect policy action or a change in the risk assessment. So it's hard to see that there would be any reaction at all. I wonder what our new Account Manager would say as well. | 62 |
fomc | 2,007 | I would agree with that. You have somewhat firmer growth but better inflation news, and so the Committee is about in the same place on net that it was before. I would be very surprised to see much of a market reaction at all. | 49 |
fomc | 2,007 | Thank you. Ready to vote? Ms. Danker. | 12 |
fomc | 2,007 | I'll read the directive from page 25 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 in reserve markets consis... | 172 |
fomc | 2,007 | Thank you. This would be a good time to have a fifteen-minute coffee break. | 17 |
fomc | 2,007 | The second portion of our meeting is devoted to communications. President Plosser submitted a memo about external communication that suggested there might be some unease in the Committee. In the hope of somewhat reducing that unease, I thought I would try to state one more time what I was trying to get at when we discu... | 670 |
fomc | 2,007 | I think this is really clear, common sense, and very constructive. | 14 |
fomc | 2,007 | Thank you. If there are no other comments, I'll turn the meeting over to Governor Kohn. | 20 |
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