Source stringclasses 1
value | Date int64 1.98k 2.01k | Text stringlengths 2 27.1k | Token_count int64 1 5.57k |
|---|---|---|---|
fomc | 2,003 | I think we're creeping up that curve on the bottom left. | 12 |
fomc | 2,003 | Well, give us another red point. [Laughter] | 12 |
fomc | 2,003 | It's hard to say. | 5 |
fomc | 2,003 | All right. So at least it is a credible theory or a theory that one could put forward that this approach is indeed the right one because the markets have become a lot better, we've become more transparent, and they understand what we're doing. So, in some sense we should validate their expectations. | 59 |
fomc | 2,003 | Governor Ferguson, the coefficients inferred from our behavior are much lower than the ones that were found to be optimal in the earlier exercise. | 26 |
fomc | 2,003 | Well, on inflation and output. | 7 |
fomc | 2,003 | Yes. | 2 |
fomc | 2,003 | Right, and that's where I was going to go with Don's point--or maybe it was the Chairman's point. Well, let me say a couple of things. One is that I think we may have been taking advantage of changing perspectives about what level of inflation is acceptable. Second, I think perhaps we have been taking some risks becaus... | 362 |
fomc | 2,003 | Yes, although if you looked at those numbers, I think they would actually strengthen my case. That's because with quarterly policy inertia after you made a move, to the extent that it was not completely anticipated and there was some policy surprise, it would have implications about changes in future rates at a six-to-... | 104 |
fomc | 2,003 | That doesn't appear to occur. Okay. | 8 |
fomc | 2,003 | Again, those inertial movements don't appear to be there because they're not showing up after the FOMC changes the target. | 25 |
fomc | 2,003 | Okay, good enough. Thank you. Those are my two points. | 14 |
fomc | 2,003 | President Stern. | 3 |
fomc | 2,003 | Thank you, Mr. Chairman. I had just a couple of comments. Starting with a point that I think Brian made, for me there's a difference here between inertia and timidity. As far as inertia is concerned, I find Glenn's story pretty convincing. So that's not what interests me particularly. On the other hand, both papers see... | 289 |
fomc | 2,003 | President Santomero. | 5 |
fomc | 2,003 | First let me congratulate Vincent and David for bringing to the table what has been an interesting issue and a worthwhile discussion. I take two things away from this. The first is that the English language is a funny thing. These titles are value laden, and we accept them at times too easily, I think. I'm taken by the... | 643 |
fomc | 2,003 | President Broaddus. | 5 |
fomc | 2,003 | Thank you, Mr. Chairman. I thought this was a very interesting topic, and I thank all the authors for their papers. I enjoyed reading them. I really don't see the two papers as in opposition so much as different approaches to essentially the same issue, and I think the results are both interesting and important. But to... | 1,239 |
fomc | 2,003 | My opinion would be that in the current situation, or even in 1998-99, what is of interest is that inertia is not operating at these quarterly frequencies. These are situations--and one of them would be the repercussions from the Russian default--in which the Committee sees some serially correlated influences that may ... | 142 |
fomc | 2,003 | I'll take the other side. If policy is inertial, what we highlight in exhibit 3 are the benefits of inertia when markets and agents are forward-looking. You provided some very nice examples of exactly what happens in these models. In these models, policymakers by assumption are committed to the optimal rule, which has ... | 220 |
fomc | 2,003 | If we break this pattern, though, and move boldly in some situation, what is the cost associated with the loss of credibility for inertia, if I can use that phrase? It seems to me that is the kind of thing we have to be informed about if we ever have to make these choices going forward. | 62 |
fomc | 2,003 | That's a difficult question because it depends on how people learn, a mechanism that is not formally in the model itself. If people have completed their learning and know your rule and you do something quite different from your rule, does that cause them to reinterpret what you're doing and conclude that you must not b... | 164 |
fomc | 2,003 | People will cut us a little slack? | 8 |
fomc | 2,003 | Yes. But if you're responding idiosyncratically to normal shocks so that it doesn't seem as if you're acting in a systematic way, that will undermine people's beliefs that you're following a committed rule, or rule-like behavior, that anchors their expectations. That is the key here. One thing we didn't show you in the... | 193 |
fomc | 2,003 | Thank you. | 3 |
fomc | 2,003 | Let me make just one point, President Broaddus, which goes back to how this conversation started a while ago. The Chairman asked Brian what the R2 was in this exhibit on changes, and the answer was 0.4. There is plenty of unexplained variation. It's going to take a while before market participants decide that the rule ... | 150 |
fomc | 2,003 | I feel more comfortable. | 5 |
fomc | 2,003 | Vice Chair. | 3 |
fomc | 2,003 | Thank you, Mr. Chairman. Most of the people that I know in financial markets understand as much about these models as I do, which isn't very much. Having the enormous benefit, unlike all previous speakers, of not having a PhD in economics--or perhaps in English literature, in the case of President Santomero--I think th... | 1,012 |
fomc | 2,003 | How does it feel to be bold and wrong? [Laughter] | 14 |
fomc | 2,003 | That's why you're prudent--also known as risk averse--but prudent sounds so much better. | 19 |
fomc | 2,003 | I have one brief comment on that, which is how I would come out on this issue. If the choice were whether the Fed should change its behavior to match the models or whether we should change the models to have optimal monetary policy match historical Fed behavior, I'd probably go for the latter. But it's not clear to a l... | 79 |
fomc | 2,003 | Well, as the Chairman said, there's a good deal of psychology involved. Therefore, we're dealing with all the social sciences, however mathematical we try to make them, at the same time. What is the reaction of financial markets? That's largely psychological. What is the reaction of the real people? It's almost purely ... | 93 |
fomc | 2,003 | For example, the policymaker perfect foresight path in the Bluebook is perhaps interesting, but the psychology has to be taken as missing from that. | 30 |
fomc | 2,003 | Governor Gramlich. | 4 |
fomc | 2,003 | After pondering this, I'm going to talk more about policymaking than the papers or models, and I'm going to say what Bill just said in a somewhat different way. We, of course, want to be prudent, responsible, stable, and all those things. It has been assumed that we get prudence, stability, credibility, and so forth on... | 275 |
fomc | 2,003 | President Poole. | 4 |
fomc | 2,003 | There's a lot more communication with the markets than just the intended fed funds rate itself. One of the things that I find striking is that this Committee and, of course, particularly the Chairman have really been remarkably clear and coherent about a whole variety of things on which it's possible to be clear and co... | 432 |
fomc | 2,003 | President Hoenig. | 4 |
fomc | 2,003 | Mr. Chairman, it's late and some of my intended comments would repeat what others have said, so I'll be fairly brief. One point I would note is along the lines of Vice Chairman McDonough's comment on modeling human behavior. We have two models here, and most of us probably can agree with some dimension of each model de... | 213 |
fomc | 2,003 | Governor Bies. | 4 |
fomc | 2,003 | Let me make a couple of different comments. Also because of the time, I am not going to repeat some of the comments others have made. One of the things I found interesting in reading these papers was Glenn's chart on page 2, which looked at the different rules and the actual fed funds rate. What strikes me is that the ... | 529 |
fomc | 2,003 | Thank you very much. Any further comments to close this discussion? If not, we have a report from Dino. | 23 |
fomc | 2,003 | 2 Thank you, Mr. Chairman. I'll be referring to the package of charts that is being circulated. The first graph shows three-month cash deposit rates in the United States and the euro-area and three-month deposit rates three, six, and nine months forward for both the dollar and the euro. The cash rates were stable in th... | 2,145 |
fomc | 2,003 | Questions for Dino? | 4 |
fomc | 2,003 | Just one, Dino, on your dollar chart on page 2. You said that some people think the dollar is in equilibrium now because it is back at its historical level. Has anybody looked at the current account deficit to inform those judgments? | 48 |
fomc | 2,003 | Well, the people citing that view are perhaps not taking the analysis as far as you're suggesting. I think it's probably more mechanical--looking at the dollar's highs and lows and figuring that, since it's somewhere in between, it might be approaching something of an equilibrium. But, again, many people tend to look a... | 88 |
fomc | 2,003 | Further questions? Cathy. | 5 |
fomc | 2,003 | I was interested in your comments on risk aversion and the various ways that you see it in the market. In the last couple of statements after our meetings, we've referred to geopolitical uncertainty. But with the weakness apparent in the incoming economic data, there also has to be a degree of uncertainty that simply r... | 95 |
fomc | 2,003 | That's a very good point, President Minehan. I think that is reflected in the concerns about some of the corporate reports that have been coming out and about the weakness in the production and employment data. It's very hard to put percentages on that, but that type of uncertainty about the underlying strength of the ... | 122 |
fomc | 2,003 | Yes. It seems to me that if all the uncertainties center on a discrete geopolitical event--a go/no-go decision such as we go to war or we don't go to war--that has one implication for how to look at the second half of the year. As in the Greenbook, one could look at various scenarios that make some big assumptions abou... | 163 |
fomc | 2,003 | I don't want to comment on the forecast or what the market might or might not be expecting with precision. I think many have an assumption that the second half will be strong. So that's one of the factors for which there might be-- | 47 |
fomc | 2,003 | They are thinking a little more of a discrete event or that kind of thing--something that is resolved faster rather than slower. | 25 |
fomc | 2,003 | Well, the way that I would put it is that the forecasts for the third and fourth quarters are relying upon a lot of positive things happening in the next few weeks on the geopolitical front and also on the assumption that the data will get better. Now, if things do not turn out that way, then quite a bit of risk might ... | 82 |
fomc | 2,003 | President Minehan, one thing that makes the kind of decomposition you're suggesting especially difficult to do is that, if geopolitical risks actually have affected business decisions on hiring and production, then some of what appears to be a response to weak employment and production data is indirectly a response to ... | 61 |
fomc | 2,003 | May I slide a comment in here? In talking with people in the New York, London, and Paris financial centers, it's very, very hard to determine to what extent they are saying that the uncertainty is geopolitical when it's really a cover story for uncertainty about economic issues. It's absolutely impossible to distinguis... | 182 |
fomc | 2,003 | That's the real dilemma we're looking at for the next month and a half. | 15 |
fomc | 2,003 | Yes. | 2 |
fomc | 2,003 | Exactly. | 2 |
fomc | 2,003 | Governor Ferguson. | 3 |
fomc | 2,003 | I want to ask a question about your page 3. When I see a chart like this that shows spreads of corporate yields versus Treasuries for a short period, the question that comes to my mind is, What should one consider the norm? If one had a much longer historical chart, I don't know what it would show. Is a spread somewher... | 162 |
fomc | 2,003 | Well, if we go back to the 1997-98 period, spreads were extremely tight. If anything, they were probably too tight and were not factoring in as much risk as people were undertaking. So in that sense I've intentionally left that out. But if we exclude that period, at least based on the sense I get from people in the mar... | 198 |
fomc | 2,003 | As you know, Governor Ferguson, and as Dino noted, these spreads move around a good deal. We're struck by the fact that they've come down of late, but they've come down from an unusually high peak. The high-yield spreads bottomed out, as Dino said, in the neighborhood of 240 basis points at a time when we think risk av... | 119 |
fomc | 2,003 | Another way of looking at this is that these spreads now are roughly where they were in January 2001, when the Committee first started easing and when there was a lot of risk aversion, especially in the high-yield market. They are also close to the levels of October 2001 right after the terrorist attacks. So they're ba... | 88 |
fomc | 2,003 | In fact, if you want an even more evocative comparison than that, the last time the spreads were there before then was in 1990. | 30 |
fomc | 2,003 | Thank you. | 3 |
fomc | 2,003 | Governor Bies. | 4 |
fomc | 2,003 | I have a question on page 3 also, on the bottom chart showing a decline in U.S. corporate debt issuance. Do those figures also include obligations involving funds raised by corporations through securitization, or is that just straight corporate debt? | 49 |
fomc | 2,003 | I believe it is straight corporate debt. I would have to check on that, but I don't believe it would include Ford ABS, for example. | 29 |
fomc | 2,003 | Well, that's what I was wondering. Back to your risk aversion--to the extent that corporate debt has gotten very expensive to issue, some companies are substituting commercial mortgage-backed securities, collateralized debt obligations, and those types of things in lieu of straight corporate debt. | 55 |
fomc | 2,003 | Yes, some clearly have. That was especially true in the fall, when a lot of corporations could not issue straight debt, and they went that route because it was still available to them. | 38 |
fomc | 2,003 | We ought to amplify the charts to show that. | 10 |
fomc | 2,003 | Yes, I think that's right. If it included securitization, those data, which are included in the sources and uses of funds, would have to show a huge sale of securities. They don't show that, which suggests that it is a different set of data. | 54 |
fomc | 2,003 | The other form of substitution that firms used at that time, Governor Bies, was to run down liquid assets. In the flow of funds accounts we see a big decline in liquid assets. | 38 |
fomc | 2,003 | Right. That was another question I had. To the extent that corporate cash flows have gotten a little better, I wondered whether that has had an effect too. | 32 |
fomc | 2,003 | Certainly there was a run-down in commercial paper being "termed out." There was also some paydown of commercial paper financed by running down cash balances. Some of that was going on as well. | 40 |
fomc | 2,003 | Okay. | 2 |
fomc | 2,003 | Any further questions? If not, let's adjourn until-- | 12 |
fomc | 2,003 | Mr. Chairman, I move approval of the domestic operations. Sorry, I almost forgot. | 18 |
fomc | 2,003 | Oh yes. Without objection they are approved. Let's adjourn then until 9:00 a.m. tomorrow. | 23 |
fomc | 2,003 | Good morning, everyone. We'll begin today's session with the chart show presentation. | 15 |
fomc | 2,003 | 3 Before we start the chart show itself, I want to give you an update on the data released yesterday on orders, shipments, and inventories. These are on the separate sheet inserted in the chart show package. As shown on line 1, new orders for nondefense capital goods rose 2.8 percent last month--about in line with our ... | 2,429 |
fomc | 2,003 | One of the defining characteristics of the economy over the past two years has been the lack of any net employment gains despite a recovery in economic activity. As shown in the top left panel of chart 5, nonfarm payrolls in the fourth quarter of last year (the T+4 observation) were lower than at the time of the appare... | 1,889 |
fomc | 2,003 | Are these in real terms? | 6 |
fomc | 2,003 | No, these are nominal terms. In this scenario, real GDP falls this year and next, whereas inflation is higher in both years. Real GDP regains some of the shortfall relative to baseline in 2005, largely in response to easier monetary policy. These model simulations suggest two tentative conclusions about the macroeconom... | 151 |
fomc | 2,003 | Chart 10 presents recent developments in selected global financial markets. The decline in the exchange value of the dollar in terms of the major foreign currencies has been a feature of these markets since early 2002. The top left panel shows the movements of the dollar in terms of its index of other major currencies ... | 2,863 |
fomc | 2,003 | The final chart presents your forecasts for 2003. You have revised down your projection for the growth of real GDP and raised your forecast of the unemployment rate. Your projection for PCE prices this year has been lowered a touch. That concludes our prepared remarks, Mr. Chairman. We'd be happy to take any questions. | 64 |
fomc | 2,003 | I don't have any difficulty with the underlying U.S. forecast. I am bedazzled by the Canadian forecast. It used to be a forecast proxied by the U.S. outlook; it clearly isn't today. The projections for the two countries are diverging considerably. It's scarcely a manufacturing industrial commodity type of issue. The st... | 86 |
fomc | 2,003 | You know, I've asked every Canadian economist I've run into over the past nine months why Canada is doing so well when other countries are not. Partly it may be a fortuitous mix in what their economy produces. Canada is not as heavily high-tech oriented as we are, Nortel notwithstanding, and it did not experience the e... | 97 |
fomc | 2,003 | Is the wealth effect significantly less? I ask because Toronto's stock prices look about like ours. | 19 |
fomc | 2,003 | They do, but Nortel itself is a huge share of the Toronto stock index. Off the top of my head I can't answer specifically how large the Canadian wealth effects are. We do have estimates of that. I didn't bring them with me so I can't tell you, but I can certainly find out. Another issue is the exchange rate. The Canadi... | 86 |
fomc | 2,003 | Shouldn't that be showing up in export demand? | 10 |
fomc | 2,003 | It should be showing up in exports, but it could also show up to some degree in the willingness of domestic producers to invest. It's not that exports haven't been reasonably strong. It's just that Canada has been importing as well, so the net export effect is not all that much. But exports have been doing their share.... | 135 |
fomc | 2,003 | Has the corporate governance problem in Canada mirrored what has happened here, or is it significantly less? | 19 |
fomc | 2,003 | I don't know of any specifically Canadian firms that have been making headlines whereas I could name some European firms, for example. That leads me to conclude, merely on the face of it, that it may be a bit less in Canada. | 47 |
fomc | 2,003 | The reason I raise the issue is not just for the sake of entertainment or interest regarding what is going on in Canada but because I think their economic performance is telling us something. It would be very interesting to figure it out. Let me give you a hypothesis. The American economy was moving up reasonably quick... | 89 |
fomc | 2,003 | Right. | 2 |
fomc | 2,003 | The effects of the corporate governance scandals have diffused since then. There are some--Wrightson, for one, among the Wall Street analysts--who claim that that was the turning point or a very significant impact point, and indeed the data are not inconsistent with that. The divergence in Canada emerged from that time... | 146 |
fomc | 2,003 | Well, I might mention another issue that we are constantly looking into. I can't claim it as a fact, but I still maintain it as a hypothesis. Canada was always a place where we were looking for an acceleration in productivity growth comparable to the U.S. acceleration because of their links to us and their similarities... | 137 |
fomc | 2,003 | Am I correct that their productivity growth in 2002 was not greater than ours? | 17 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.