Source stringclasses 1
value | Date int64 1.98k 2.01k | Text stringlengths 2 27.1k | Token_count int64 1 5.57k |
|---|---|---|---|
fomc | 1,996 | I understand that, but there is still some of that around. The social security cost-of-living measure still uses the CPI, I believe. | 29 |
fomc | 1,996 | Let me put it this way. I think there is a growing consensus that using the CPI on all the government programs is something that we should veer away from. If we were to go to the gross domestic purchases price index or something like that, it would not change the world, but I will bet that it would have some effect on ... | 73 |
fomc | 1,996 | No, I was not trying to defend the CPI. I was trying to acknowledge that it has an institutional role. It may not be as important as it once was, but it is still there. It may have something to do with the estimates that Janet cited about what the Phillips curve is like if inflation is at a very low level because some ... | 83 |
fomc | 1,996 | I agree with you. I think they are. Fortunately, I don't think there is a large number of them with the exception of the federal government. The CPI is a diminishing element. Thirty to forty years ago, it was sacrosanct. | 50 |
fomc | 1,996 | Could I follow up on that? If we come to a conclusion as to what we think is the right inflation rate and, going back to Governor Yellen's presentation, it turns out to be a rate where 33 percent of the firms in the country have to force nominal wage reductions, it will not fly. The American people will not find it acc... | 202 |
fomc | 1,996 | I think there is a problem in that when inflation is up to 5, 7, or 10 percent, people have an implicit view that there is a floor below which inflation cannot go. It is the issue of nominal interest rates. People look at nominal interest rates and say, if they are down to 1 percent, get them as close to zero as possib... | 480 |
fomc | 1,996 | Sure. | 2 |
fomc | 1,996 | But now we are getting there and the question is basically whether we are willing to move on to price stability. The question really is whether we as an institution can make the unilateral decision to do that. I agree with you, Mr. Vice Chairman. I think that this is a very fundamental question for this society. We can... | 246 |
fomc | 1,996 | But it is a level change, not a permanent increase. | 12 |
fomc | 1,996 | No, take a look at the Greenbook. In the first quarter of 1997, the GDP deflator goes up .1 percent from the fourth quarter of 1996. The gross domestic purchases index goes up by .7 or .8 percent because we have an assumption of a significant rise in crude oil prices at the beginning of the year. | 71 |
fomc | 1,996 | What happens in the second quarter? | 7 |
fomc | 1,996 | It is not relevant. | 5 |
fomc | 1,996 | Right, that is the point. That is what I meant by a level change. | 17 |
fomc | 1,996 | But supposing the price level goes up again in the second quarter and up again in the third? | 20 |
fomc | 1,996 | That would require a constant acceleration in oil prices. | 10 |
fomc | 1,996 | Yes, sure. | 4 |
fomc | 1,996 | With feedback. | 3 |
fomc | 1,996 | How do we respond to that? The GDP deflator is 2 percent. I can create a scenario where the GDP deflator is 2 percent and the gross domestic purchases index is 5 percent. | 41 |
fomc | 1,996 | It would eventually work its way into GDP at some point. | 12 |
fomc | 1,996 | Over the long run, oil prices would work their way through but never fully. That's because there would be a significant shift to domestic natural gas. The economy would go back to using more coal, and we would have much smaller cars. So, the higher oil prices would filter through only partly. | 59 |
fomc | 1,996 | But focusing on GDP, you are still going to be addressing the question of an external oil shock. | 20 |
fomc | 1,996 | Yes. That is a relevant issue. It is not a hypothetical question. You are talking about a 2 percent inflation goal. What do you do in this situation? | 34 |
fomc | 1,996 | Hasn't all the discussion allowed for taking shocks to the system into account? It is not that we would immediately react dramatically to bring down the rate of inflation. | 32 |
fomc | 1,996 | But there are different types of shocks, and there are all of these different alternatives. At this point I will merely suggest that we adjourn. It is 6:31 p.m. We actually have made far more progress today than any remote expectation I had. We will reconvene at 9:00 a.m. tomorrow. | 67 |
fomc | 1,996 | We will now discuss the long-term ranges of the monetary aggregates, and I will call on Dave Lindsey. | 21 |
fomc | 1,996 | Thank you, Mr. Chairman. [Statement--see Appendix.] | 13 |
fomc | 1,996 | Thank you. Questions for David? | 7 |
fomc | 1,996 | How much tighter is the tighter alternative? | 8 |
fomc | 1,996 | A quarter point increase for the next four FOMC meetings, so an upward adjustment of 100 basis points by year-end. | 26 |
fomc | 1,996 | President Parry. | 4 |
fomc | 1,996 | I want to ask a question about the simulations in Bluebook Charts 2 and 3. They have interest rate implications that can affect the growth of the aggregates over the long term. PCE inflation has averaged about 2-1/2 percent in the last two years, and it was as low as 2.1 percent in the last four quarters. The simulatio... | 165 |
fomc | 1,996 | When we designed this, we had to design it around the Greenbook forecast, which already had some uptick in inflation. Our design process was to level out the PCE and not allow it to rise any further. In the baseline run, the solid line reflects the fed funds rate assumption in the Greenbook and then shows what tighteni... | 134 |
fomc | 1,996 | It really gives one the impression that holding the line on inflation is a relatively painless process when in fact holding the line on inflation truly may be very painful. | 31 |
fomc | 1,996 | In order to bring inflation back down to 2-1/2 percent, we would need at least the beginnings of a tighter policy. | 28 |
fomc | 1,996 | Thank you. | 3 |
fomc | 1,996 | President Jordan. | 3 |
fomc | 1,996 | David, John Carlson on my staff has been doing some work with MZM [Money with Zero Maturity]; have you looked at that recently? | 29 |
fomc | 1,996 | Yes, I looked at the chart that I got from him yesterday. We have done a little work on MZM. That chart and our earlier work do not show anything like the breakdown in the velocity/ opportunity cost relationship that has occurred for M2 in the 1990s. On the other hand, judging by that chart and the econometric work we ... | 270 |
fomc | 1,996 | I think your analysis is right about the dangers of using MZM if something causes an acceleration of inflation so that we get a misreading of what that indicator is telling us. But it is somewhat less interest sensitive than the old M1. We have the problem of sweep accounts with the M1 measure that we do not have with ... | 135 |
fomc | 1,996 | Yes. I am somewhat sympathetic to that suggestion. Obviously, we do not currently target Ml; we do not currently put much weight on it. Clearly, the sweep-account problem, which involves these adjustments only for the initial sweeps, is making it more and more difficult over time to have confidence in Ml, even after sw... | 91 |
fomc | 1,996 | We will assume that you just did! Any further questions for David? Before we go around the room, let me just repeat what the structure of the discussion was when we looked at this issue back in February. I must compliment the staff for indicating then that growth of the broader aggregates was likely to run at the upper... | 573 |
fomc | 1,996 | Mr. Chairman, even though you did not utter the word "tax," I am going to respectfully disagree. [Laughter] | 26 |
fomc | 1,996 | With respect to tax policy? [Laughter] | 10 |
fomc | 1,996 | If you had uttered the word "tax," I probably would have disagreed disrespectfully or something. As you stated, Mr. Chairman, we set a range that we thought was going to be consistent with our intermediate- or longer-run targets for inflation. The number that I heard yesterday was 2 percent inflation as an interim targ... | 91 |
fomc | 1,996 | Only in a nongraduated income tax structure! [Laughter] | 15 |
fomc | 1,996 | That is probably true. The first consideration is that the midpoint of the Alternative II range is 4, and that range is therefore consistent with our stated purpose in setting a range. Second, even though there may be an argument over what the word "tighter" means in the shorter run, if we tighten 100 basis points this... | 348 |
fomc | 1,996 | Incidentally, before we go forward, Governor Lindsey referred to a matter that reminded me how very important it is for all of us to recognize the highly confidential nature of what we talk about at an FOMC meeting. We all have seen some evidence recently of Fed officials mentioning what the Committee was going to do o... | 498 |
fomc | 1,996 | Thank you. I agree with your initial remark about the message that would be sent by changing the ranges and to me that consideration dominates. But with regard to the substance of the ranges that we announce and any information content they may have, we know that the lags are fairly long. It is not just 1997 that we ne... | 226 |
fomc | 1,996 | President Melzer. | 4 |
fomc | 1,996 | Alan, I agree with what you have suggested. I do not want to prejudge the outcome of this meeting, but it is possible that we will not take any action with regard to our short-run policy. In that event, I would not want to take any action with regard to these ranges. As you suggested, that might lead people to misconst... | 232 |
fomc | 1,996 | Vice Chairman. | 3 |
fomc | 1,996 | Mr. Chairman, if we were starting out from scratch I would be in favor of Governor Lindsey's position. But we are not starting out from scratch, and as you suggested the message likely to be given by a change in the ranges would be an unfortunate one. We also have to live with the other issue that Governor Lindsey very... | 278 |
fomc | 1,996 | Governor Yellen. | 4 |
fomc | 1,996 | I agree fully with Governor Lindsey's reasoning on this along with his assessment of the likely consequences of saying that we have made a technical adjustment. I would certainly grant that our Humphrey-Hawkins report has honestly stated that the ranges in Alternative I encompass the Committee's expectation for growth ... | 331 |
fomc | 1,996 | I got your message. I am just curious. Has anybody been asked about the targets of late? SEVERAL. No. | 26 |
fomc | 1,996 | President Broaddus. | 5 |
fomc | 1,996 | Mr. Chairman, I agree strongly with your recommendation and for the reasons you stated. As I mentioned yesterday, I think monetary policy has to have some long-term anchor. In the absence of an explicit inflation target, I see the need to maintain this range, which is centered around the longer-term rate of M2 growth t... | 113 |
fomc | 1,996 | President Guynn. | 4 |
fomc | 1,996 | Mr. Chairman, I would join those who argue that the risk of an unintended signal effect from a change at this time, even though the probability may be very low, is a risk we just do not need to take. At least for the moment, that argument substantially outweighs in my view the argument for a technical adjustment. So, I... | 78 |
fomc | 1,996 | President Stern. | 3 |
fomc | 1,996 | I agree with those who think that the case for leaving the ranges unchanged at this point is a strong one. I certainly would welcome renewed usefulness of M2, but I do not think the evidence, while it may be encouraging, is sufficient yet. As a consequence, I don't think we ought to raise its profile or prominence. We ... | 94 |
fomc | 1,996 | President Moskow. | 4 |
fomc | 1,996 | Mr. Chairman, I agree with your recommendation and with the way Gary Stern phrased it. I think there is a serious risk that increasing the ranges would be misinterpreted, primarily because of what we have done in the past. Since we have not changed them in the past under similar circumstances, why would we suddenly wan... | 202 |
fomc | 1,996 | President Boehne. | 5 |
fomc | 1,996 | I think one can argue this issue either way. It is not an issue that elicits strong feelings on my part one way or the other. On balance, I would prefer to keep the ranges as they are. My primary reason is that you are the spokesman for the Committee; you are the one who has to present the Humphrey-Hawkins testimony. I... | 90 |
fomc | 1,996 | President Parry. | 4 |
fomc | 1,996 | Mr. Chairman, I certainly support your recommendation for the reasons you stated and those that were mentioned by others. However, I would like to make an additional point. I think we ought to keep in mind that the projections that we have here are staff projections based upon the staff's baseline economic forecast. Qu... | 133 |
fomc | 1,996 | President McTeer. | 5 |
fomc | 1,996 | I agree with your suggestion that we not change the ranges and only partly because I think a change might give the wrong impression. Raising a range because our projection is a little higher is a little like drawing a target around the bullet hole in the wall. I think we ought to take the M2 range fairly seriously, be ... | 96 |
fomc | 1,996 | Governor Meyer. | 3 |
fomc | 1,996 | Mr. Chairman, I am uncomfortable with the current procedure embodied in Alternative I for setting the target ranges of M2 and M3, particularly M2 in this discussion. It seems to me that this approach is quite inconsistent with the spirit and the letter of Humphrey-Hawkins. I believe it also differs from the public perc... | 348 |
fomc | 1,996 | President Minehan. | 4 |
fomc | 1,996 | I, too, am in favor of your recommendation, Mr. Chairman, for many of the reasons that have been expressed around the table. I think it is a communication device. With only a few technical exceptions, all the changes we have made in the ranges over the years have been to reduce them consistent with our objective of fos... | 105 |
fomc | 1,996 | Governor Kelley. | 3 |
fomc | 1,996 | Mr. Chairman, I have no strong feeling about the ranges themselves, but I do feel strongly that the management of the issue is important. In that sense, I strongly support your recommendation. | 38 |
fomc | 1,996 | Governor Phillips. | 3 |
fomc | 1,996 | It is. certainly premature to restore M2 and M3 to their full status as policy indicators, but I do think that we should recognize that they are performing a bit better in terms of velocity and GDP growth. I thought David Lindsey's chart presentation was extremely useful, and I particularly liked the first chart that s... | 264 |
fomc | 1,996 | President Hoenig. | 4 |
fomc | 1,996 | Mr. Chairman, I am for leaving the ranges unchanged. First of all, Dave Lindsey made a good point in the sense that, although his chart on velocity suggests more stability over the past 2 years or so, it is still too early to come to any firm conclusion. Secondly, I think changing the ranges systematically involves mor... | 174 |
fomc | 1,996 | Governor Rivlin. | 4 |
fomc | 1,996 | I, too, am somewhat uncomfortable with the whole discussion, as I think everybody is. I would go along with your recommendation, but I think we ought to think seriously over the next few meetings about whether ranges are in any sense an effective policy tool or whether we are going to have a continued discussion at eac... | 80 |
fomc | 1,996 | We inadvertently got ourselves into this box, and it occurred in a context of M2 beginning to veer off from expected relationships. At the moment, we are at the lower end of potential target ranges largely because M2 was tracking close to zero for quite a long period of time. We had the problem for a protracted period ... | 111 |
fomc | 1,996 | We did draw the target around the bullet hole! | 10 |
fomc | 1,996 | Clearly, there is something fundamentally wrong here. There is no doubt about that. But before we play with these ranges, I would prefer that we concentrate on qualitative discussions with respect to M2 and elevate M2 if in fact it begins to deserve more emphasis as an indicator. I do not think there is any doubt that ... | 184 |
fomc | 1,996 | I will be reading from page 20 in the Bluebook. The first sentence is the standard one: "The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. In furtherance of these objectives, the Committee reaffirmed at this meeting the r... | 262 |
fomc | 1,996 | Would somebody like to move? | 6 |
fomc | 1,996 | So move. | 3 |
fomc | 1,996 | Is there a second? | 5 |
fomc | 1,996 | Second. | 2 |
fomc | 1,996 | Call the roll. | 4 |
fomc | 1,996 | Chairman Greenspan Yes Vice Chairman McDonough Yes President Boehne Yes President Jordan Yes Governor Kelley Yes Governor Lindsey No President McTeer Yes Governor Meyer Yes Governor Phillips Yes Governor Rivlin Yes President Stern Yes Governor Yellen No | 47 |
fomc | 1,996 | Now we will move on to current monetary policy issues. I call on Don Kohn. | 18 |
fomc | 1,996 | Thank you, Mr. Chairman. [Statement--see Appendix.] | 13 |
fomc | 1,996 | Questions for Don? | 4 |
fomc | 1,996 | Don, when you think in terms of long-term real interest rates, where do you conceptually put the uncertainty premium about inflation? Is that in the real component? | 33 |
fomc | 1,996 | Yes, it is and that is because it has always been there. When we think of these things, we do it based on history, and the uncertainty premium has been in the real rate historically. I think that would be another reason why the real rate might move around over time. If people are less uncertain now than they were 10 or... | 96 |
fomc | 1,996 | So, if I were comparing a time when a rise in real rates was strictly due to a change in real activity--real supply and demand were the sole contributors to an increase in real rates--I would distinguish between that situation and one where perhaps some of the increase was due to greater uncertainty about future inflat... | 69 |
fomc | 1,996 | In thinking further about my answer to your question about where the uncertainty is located, I believe we have to be careful. There is uncertainty in financial markets that leads them to demand a higher real rate premium. But we also need to think about the individuals and the businesses that spend the money. My answer... | 150 |
fomc | 1,996 | President Jordan. | 3 |
fomc | 1,996 | Don, I want to ask you about your relative confidence level for variables used in your forecast. But in view of your response to Tom Melzer just now, I am not sure whether I should rethink the question. In your prepared remarks, you used the Philadelphia Fed survey of expected CPI inflation, but the Bluebook looked at ... | 390 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.