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fomc | 1,999 | I certainly support your recommendation, Mr. Chairman. Let me make a few somewhat random, but hopefully not too random, comments. First of all, I enjoyed your analysis, especially the point about the importance of global capacity and the arbitrage between the manufacturing and service sectors. It is something I have be... | 658 |
fomc | 1,999 | Governor Ferguson. | 3 |
fomc | 1,999 | Mr. Chairman, I support both halves of your recommendation. I also want to comment a bit on the strategy, which I strongly endorse. As I said yesterday, in periods when models do not seem to be working very well--and we seem to be in one of those periods--I think it is quite important to weigh the incoming data more he... | 268 |
fomc | 1,999 | President Poole. | 4 |
fomc | 1,999 | Mr. Chairman, I support your recommendation. I would like to talk a bit about what I regard as a very important issue, which Larry Meyer emphasized yesterday. And that is that we need to be talking not just about the setting of the federal funds rate, but about the policy strategy from which the current rate setting ar... | 815 |
fomc | 1,999 | President Boehne. | 5 |
fomc | 1,999 | I support your "B" symmetric recommendation. I believe watching and waiting is the right approach at this point. I think most of us feel that we are sitting on a situation that is really very positive; or at least our experience over the last several years has been favorable. We may have some inner sense that it will n... | 322 |
fomc | 1,999 | President Hoenig. | 4 |
fomc | 1,999 | Mr. Chairman, I am satisfied with your recommendation. As I mentioned yesterday, we have put some additional stimulus into the economy over the last several months and I think there is a case to be made for some unwinding of that, perhaps in the not-too-distant future. Depending on unfolding developments, that might be... | 88 |
fomc | 1,999 | President Guynn. | 4 |
fomc | 1,999 | Mr. Chairman, I like your recommendation, including the handling of the symmetry issue. I hope, like others, that you will use the Humphrey-Hawkins setting to put people on notice that we are in fact prepared to tighten if circumstances suggest that is appropriate. I was particularly pleased that you resurrected the no... | 250 |
fomc | 1,999 | President Minehan. | 4 |
fomc | 1,999 | As my comments over the last couple of days probably have indicated, I can accept not changing policy but I am a little more uncomfortable with not changing the symmetry. In our meetings last summer we discussed--though you were much more expansive in your discussion today--the various aspects of what is going on and h... | 487 |
fomc | 1,999 | Governor Meyer. | 3 |
fomc | 1,999 | When I think about the inflation process and the inflation dynamic, I always point to two things: excess demand and special factors. I don't know any other way to think about the proximate sources of inflation. When I think about excess demand, I think about NAIRU. If we eliminate NAIRU and that concept of excess deman... | 524 |
fomc | 1,999 | Governor Gramlich. | 4 |
fomc | 1,999 | Mr. Chairman, I am happy to support your recommendation for sitting tight. I think Larry Meyer made a useful contribution yesterday. I have been thinking in my own mind about how to resuscitate the Taylor rule. I may not agree with everything he said, but I view it as a reasonable strategy. One thing it means is that a... | 420 |
fomc | 1,999 | President Broaddus. | 5 |
fomc | 1,999 | Mr. Chairman, in terms of the earlier discussion about the way the world works, I want very much to believe my lying eyes but I am having difficulty doing that. I don't doubt that there is a missing variable out there. Your point on that is very well taken. But the fact is that we really don't know what it is exactly. ... | 504 |
fomc | 1,999 | President Parry. | 4 |
fomc | 1,999 | Mr. Chairman, I support your recommendation with regard to the federal funds target. But I share many of the concerns that have been expressed by my colleagues, particularly President Minehan and Governor Meyer. I also believe that it is less clear, certainly less clear than at the last meeting, that the risks to the o... | 108 |
fomc | 1,999 | President McTeer. | 5 |
fomc | 1,999 | I agree with and support both parts of your recommendation. | 11 |
fomc | 1,999 | Governor Kelley. | 3 |
fomc | 1,999 | Mr. Chairman, I certainly support your recommendation. But I also would like to associate myself with the many concerns and reservations that have been expressed by a number of members of the Committee. Let me add just one additional brief caution. We frequently speculate about whether or not this Committee should or s... | 170 |
fomc | 1,999 | President Jordan. | 3 |
fomc | 1,999 | Thank you. Quite a few references have been made to the role of expectations. I did not come into this meeting with any expectation that there would be an adjustment in the funds rate at this meeting. I didn't know what the reasons for not making an adjustment might be, but I did not expect an adjustment. However, I st... | 588 |
fomc | 1,999 | President Moskow. | 4 |
fomc | 1,999 | Thank you, Mr. Chairman. It is clear from our discussion that there is a lot we don't know. I think we all feel this conflict--I certainly do--between what economic theory and economic models are saying on the one hand and what we have seen as the reality in recent years. We all have been over-forecasting inflation and... | 287 |
fomc | 1,999 | There is a substantial majority in favor of "B" symmetric and I would like Norm to read the directive accordingly. | 23 |
fomc | 1,999 | This language begins at the bottom of page 23 of the Bluebook: "To promote the Committee's long-run objectives of price stability and sustainable economic growth, the Committee in the immediate future seeks conditions in reserve markets consistent with maintaining the federal funds rate at an average of around 43/4 per... | 98 |
fomc | 1,999 | Call the roll. | 4 |
fomc | 1,999 | Chairman Greenspan Yes Vice Chairman McDonough Yes President Boehne Yes Governor Ferguson Yes Governor Gramlich Yes Governor Kelley Yes President McTeer Yes Governor Meyer Yes President Moskow Yes Governor Rivlin Yes President Stern Yes | 45 |
fomc | 1,999 | Thank you. Our next meeting, as you all know, is on Tuesday, March 30. | 20 |
fomc | 1,999 | I have just one question on something Don Kohn said earlier. Next meeting we will be under the new regime where if some significant change in the Committee's consensus develops, in the sense that we talked about at the last meeting, we would announce that in the afternoon. Is that right? | 58 |
fomc | 1,999 | If it involves a significant shift in the Committee's consensus, that would have to be considered. Yes, the new regime would be in effect. | 29 |
fomc | 1,999 | But we are not required to say anything? | 9 |
fomc | 1,999 | We are not required. | 5 |
fomc | 1,999 | But the regime is in effect? | 7 |
fomc | 1,999 | The regime is in effect. | 6 |
fomc | 1,999 | Just as another minor housekeeping matter: Could everyone let me know whether or not they want to change their individual forecasts? That way, even if there is no change, I will know that we haven't missed anyone. That would be helpful. | 47 |
fomc | 1,999 | Good morning, everyone. Would someone like to move approval of the minutes for the February 2-3 meeting? | 23 |
fomc | 1,999 | So move. | 3 |
fomc | 1,999 | Without objection. We will turn to Peter Fisher. | 10 |
fomc | 1,999 | Thank you, Mr. Chairman. I will be referring to the three pages of colored charts that should be on the table in front of you. 1/ As you can see in the top panel, this time I have added in the 6-month forward 3-month rate as a black dotted line; it should not be infected with any end-of-year Y2K premium, at least for t... | 1,626 |
fomc | 1,999 | Questions for Peter? | 4 |
fomc | 1,999 | I have a quick question regarding the on-the-run and off-the-run Treasuries. Could you remind me what the normal relationship has been over the last 20 years or so? | 37 |
fomc | 1,999 | I have data going back about 15 years, and the difference has been around 5 or 6 basis points. | 24 |
fomc | 1,999 | I just wanted to be sure that the less than 7 basis points you were talking about is not the anomaly against the norm. | 26 |
fomc | 1,999 | No, it is not. | 6 |
fomc | 1,999 | The September 30 through January relationship is the anomaly. | 11 |
fomc | 1,999 | Yes, the 5, 6, 7 basis point difference was the long-term trend for many, many years. | 25 |
fomc | 1,999 | Peter, what has been happening to the bid/asked spreads of both on-the-run and off-the-run forward Treasuries? | 26 |
fomc | 1,999 | I don't have that on the tip of my tongue. | 11 |
fomc | 1,999 | Peter, your staff provided me some information on that; let me see if I can remember it. The on-the-run bid/asked spreads are back to normal levels. [Laughter] | 38 |
fomc | 1,999 | If you are trying to embarrass Peter, you are succeeding! | 13 |
fomc | 1,999 | No embarrassment as long as my staff gets the credit! | 11 |
fomc | 1,999 | The on-the-run spreads are back to typical levels in all sectors of the market--in bills and both short and long coupon issues. The off-the-run spreads have come down a lot, but they are not back to where they were before the Russian crisis. They are close, but not quite there. They're still a little wider. | 67 |
fomc | 1,999 | Any further questions for Peter? | 6 |
fomc | 1,999 | I move approval of the domestic operations. | 8 |
fomc | 1,999 | Thank you. Without objection. We will move now to Mike Prell and Karen Johnson. | 18 |
fomc | 1,999 | Thank you, Mr. Chairman. For the benefit of those of you who didn't get your fill of basketball cliches over the last few days, I perhaps should characterize the U.S. economy as continuing to hit "nothin' but net"--rapid expansion and low inflation. In any event, as you know, GDP came in even higher in the fourth quart... | 1,377 |
fomc | 1,999 | The basic picture from the external sector is very similar to that in the January Greenbook. We expect net exports to continue to be a drag on GDP growth, but to a diminishing extent going forward. In the very near term, exports are a negative factor as some elements that boosted exports strongly in the fourth quarter ... | 602 |
fomc | 1,999 | Questions for either? | 4 |
fomc | 1,999 | I have a question for Karen. You are projecting a further deterioration in the trade balance currently and in the near-term future, but the projection for the dollar shows it fairly steady or actually increasing a bit. I know that last year we had a worsening trade deficit and the dollar actually appreciated, but there... | 110 |
fomc | 1,999 | The compromise forecast of a basically flat nominal dollar-or an upward tilt in the real dollar, which is what matters in the forecast--comes about primarily because U.S. inflation is projected to be slightly higher than the very, very low inflation we expect to see in most other industrial countries. So in some sense,... | 291 |
fomc | 1,999 | President Parry. | 4 |
fomc | 1,999 | Mike, I have a question about real wages. With the forecast that you have for the ECI and the core CPI, real wages are up about 11/4 percent in 1999 and about 1 percent in the year 2000. I know that represents a continuation of the pattern that seems to have existed at least since 1992 in terms of the Greenbook numbers... | 159 |
fomc | 1,999 | Well, our forecast for real compensation in terms of the employment cost index is greater than 2 percent over 1999-2000 when measured against product prices--for example, nonfarm business prices. And I think that is the more appropriate metric to look at in this context. It is more consistent with thinking about the sh... | 188 |
fomc | 1,999 | President Jordan. | 3 |
fomc | 1,999 | I want to ask something that doesn't really have an answer. But I'd like to get your views from the domestic and international side in trying to tie together some thoughts and observations about the U.S. economy and the rest of the world and which is more likely to change and why. Looking back on 1998, for the U.S. eco... | 376 |
fomc | 1,999 | I have posed the essence of your question to a lot of people. The question I have pondered is: If technology, productivity, computers, internets, or whatever are the fundamental explanation for why the U.S. performance has been better-not just for 1998 but for about the past three years--why is it that we don't see it ... | 417 |
fomc | 1,999 | Let me touch briefly on another aspect of your question. There is a school of thought--John Makin comes to mind, for example--arguing recently that an improvement in the economies of Japan and some other Asian countries will have negative effects for the United States. The view is that demand abroad will reduce the sup... | 255 |
fomc | 1,999 | President Minehan. | 4 |
fomc | 1,999 | Mike, in the introduction to your comments you implied that the forecast does not reflect in some way a belief in the "new economy." But over the last three or four years I have seen your trend rate of productivity growth first go down to less than 1 percent--say, to about 0.7 to 0.9 percent--and then just about double... | 160 |
fomc | 1,999 | I'm sorry, I'm not sure I caught the last part of your question. I was thinking about answering the first part and I lost the thread on the last part. | 33 |
fomc | 1,999 | Sorry. The second part of the question is: If you were to take a trend productivity number that was slightly less than the one you have now--let's say 1.7 percent--how sensitive is your inflation forecast in terms of the timing? You have inflation up by about 1/2 percentage point or something like that by the end of 20... | 89 |
fomc | 1,999 | The latter question is extremely difficult to answer, as is the first one. There are questions of definitions here. What do we mean by "new economy" or "new era" and so on? I don't think that's easy to pin down. In many accounts it is something that rejects all the known rules of economic behavior, or what we thought w... | 639 |
fomc | 1,999 | President Poole. | 4 |
fomc | 1,999 | I have a labor market question. We know that the labor market in the aggregate has done very, very well. We expected solid performance and it has come in better than expected. The participation rate has gone to postwar highs, I believe. At the same time, we know that manufacturing employment has been on the weak side; ... | 206 |
fomc | 1,999 | Not as much as we'd like. We've actually been thinking about examining the data on some aspects of that. One assertion that has been made is that wages are being held down because manufacturing has been weak and thus manufacturing wages haven't been rising, and that might be a sort of pattern-setting element in the pic... | 149 |
fomc | 1,999 | Similar skills are involved. | 5 |
fomc | 1,999 | Well, they are not always similar; the skilled construction worker has special skills that someone who has worked at a steel plant doesn't necessarily have. But in terms of the opportunities available, a relatively low skilled construction job might be attractive as opposed to working at McDonalds. At this point we hav... | 245 |
fomc | 1,999 | Any further questions for our colleagues? If not, who would like to start the Committee discussion? President McTeer. | 24 |
fomc | 1,999 | The economy in the Eleventh District appears to be maintaining its overall health and positive growth trend. Recent revisions to Texas employment data suggest that Texas employment grew 21/2 percent at an annual rate in the fourth quarter of last year, which is a bit higher than indicated in the original numbers. The d... | 809 |
fomc | 1,999 | President Minehan. | 4 |
fomc | 1,999 | Thank you, Mr. Chairman. Economic activity continues unabated in New England. Labor markets continue to be tight, with the unemployment rate for the region more than a percentage point below that of the nation. Employment growth continues above trend for the region, but it is still below that for the nation. Research d... | 1,281 |
fomc | 1,999 | President Hoenig. | 4 |
fomc | 1,999 | Mr. Chairman, the economy in our District continues to perform quite solidly. Employment growth in February was a bit flat, but we think that may have reflected an absence of supply of workers as much as anything. Retail sales and construction are both very strong in our metropolitan areas, and our surveys show a very ... | 513 |
fomc | 1,999 | President Moskow. | 4 |
fomc | 1,999 | Thank you, Mr. Chairman. I am beginning to sound like a broken record, but the story for the Seventh District economy is quite similar to what I reported in the last two meetings. Reports continue to suggest strength in consumer spending and housing activity, mixed signals in manufacturing, and tight labor markets, but... | 955 |
fomc | 1,999 | President Parry. | 4 |
fomc | 1,999 | Mr. Chairman, the pace of economic activity in the Twelfth District has been solid in recent months and only a little slower than last year's rapid pace. In the State of Washington, the overall job count recently increased at about a 11/2 percent annual rate despite the beginning of large cutbacks in the aerospace sect... | 584 |
fomc | 1,999 | President Guynn. | 4 |
fomc | 1,999 | Thank you, Mr. Chairman. For the past couple of meetings, I have reported that the Atlanta District economy has been on a slightly lower expansion path than the economy as a whole. However, now it looks as if the District economy has once again edged ahead of the nation and is expanding at a robust rate. While reports ... | 1,319 |
fomc | 1,999 | President Broaddus. | 5 |
fomc | 1,999 | Thank you, Mr. Chairman. Conditions in our District for the most part mirror the robust national economic situation. Consumer spending remains very strong. Indeed, our latest service sector survey suggests that retail sales are now rising more rapidly than they have at any time in the last year. Residential constructio... | 1,073 |
fomc | 1,999 | Vice Chair. | 3 |
fomc | 1,999 | Mr. Chairman, the Second District's economy showed more signs of brisk growth in the first quarter, with little increase in overall price pressures. In fact, the 12-month CPI increase in New York City at the end of February was 1.4 percent, so it was even lower than the national average. Unemployment in New York and Ne... | 1,085 |
fomc | 1,999 | President Boehne. | 5 |
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