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fomc | 2,003 | President Hoenig. | 4 |
fomc | 2,003 | I'm very comfortable with your recommendation on both counts, Mr. Chairman. | 14 |
fomc | 2,003 | President Parry. | 4 |
fomc | 2,003 | Mr. Chairman, recent data give me more confidence that an acceleration in economic activity has finally begun. At the same time, however, there is an uncomfortably high risk that inflation may move lower than would be desirable. On balance, I do favor leaving the funds rate unchanged at the present time and waiting awh... | 177 |
fomc | 2,003 | It will be. President Poole. | 8 |
fomc | 2,003 | Mr. Chairman, I support the recommendation to keep the federal funds rate where it is. Let me talk briefly about the communication process. Ahead of communication strategy logically comes the policy substance. We have to know what it is that we really want to communicate, and I think sometimes that's part of our proble... | 495 |
fomc | 2,003 | President Pianalto. | 4 |
fomc | 2,003 | Mr. Chairman, I support your recommendation on the fed funds rate and on the balance of risks statement. | 21 |
fomc | 2,003 | President Minehan. | 4 |
fomc | 2,003 | I, too, support your recommendation, Mr. Chairman. I had a reaction to your discussion about the potential for an inventory swing to be a source of upside risk. I've heard discussions in the technology arena about long supply lines, very low inventories, and the possibility that when demand begins to accelerate--people... | 215 |
fomc | 2,003 | President Broaddus. | 5 |
fomc | 2,003 | I support your recommendations, Mr. Chairman. I must say I'm attracted to Bob Parry's suggestion. I'd like to think about it a little more, but on the face of it his suggestion makes a lot of sense to me, and I'm looking forward to our communications discussion next month. | 58 |
fomc | 2,003 | First Vice President Stewart. | 5 |
fomc | 2,003 | I support your recommendation, Mr. Chairman. I also promise not to get too pessimistic, but I feel that business decisionmaking is different than it used to be. I think that's partly because of the global competition that President Pianalto talked about but also because of pressure from investors for a low-risk, high-r... | 79 |
fomc | 2,003 | President Santomero. | 5 |
fomc | 2,003 | I support your recommendation for no change in the fed funds rate and no change in the three-part statement. I think it's the right thing to do and anything else could confuse the markets. I have some sympathy with the notion that we don't want to be too explicit about where we're going if we don't know exactly. So I a... | 98 |
fomc | 2,003 | President Guynn. | 4 |
fomc | 2,003 | Mr. Chairman, I support your recommendation. I'd like to associate myself closely with Bob Parry's suggestion that we think about the merits of having some discussion of how we are going to explain our action before we vote. I'd also associate myself with Bill Poole's comment about being extremely careful in terms of w... | 101 |
fomc | 2,003 | President Stern. | 3 |
fomc | 2,003 | I, too, support your recommendation, Mr. Chairman. I would comment that what struck me about your remarks was the discussion about who has the right model--whether the Federal Reserve does or the market does. Of course, there are lots of other possibilities. In that regard I have to admit that I'm less concerned about ... | 144 |
fomc | 2,003 | President Moskow. | 4 |
fomc | 2,003 | Mr. Chairman, I support both parts of your recommendation. In particular, I would not want to change the format of the statement that we've been using for the last two meetings; today would not be the appropriate time to do it. I look forward to the discussion at our next meeting of how we're going to communicate in th... | 67 |
fomc | 2,003 | Governor Bies. | 4 |
fomc | 2,003 | Mr. Chairman, I support your recommendation, and I, too, look forward to our September discussion on communications. | 23 |
fomc | 2,003 | President McTeer. | 5 |
fomc | 2,003 | I support both parts of your recommendation. | 8 |
fomc | 2,003 | Governor Bernanke. | 4 |
fomc | 2,003 | I support both parts of your recommendation, Mr. Chairman. Let me just say a word on the communications issue because we do need to be very careful. We've seen in the last two meetings that our words have been far more powerful than our policy decision in terms of changing markets. So, indeed, our communications are a ... | 248 |
fomc | 2,003 | Governor Olson. | 3 |
fomc | 2,003 | I support both parts of the recommendation, and I also look forward to our meeting in September regarding communications. | 21 |
fomc | 2,003 | Governor Kohn. | 4 |
fomc | 2,003 | Thank you, Mr. Chairman. I also support both parts of your recommendation. I agree with those who've said that it's very difficult to talk about the future. And I play second fiddle to no one in my humility regarding my ability to forecast; as you can attest to over the years, that humility is well earned. I also agree... | 262 |
fomc | 2,003 | Governor Gramlich. | 4 |
fomc | 2,003 | Thank you, Mr. Chairman. I support both parts of your recommendation. I think if we did anything other than keep the negative bias today, the funds market would go even crazier, and long rates would back up even more. I just don't see how we can do that. I'm probably the only one here who is not particularly looking fo... | 425 |
fomc | 2,003 | I just want to note that we have not been issuing a press release after the end of each meeting for very long. We can always return to our previous procedures, if that will make you sleep better. | 41 |
fomc | 2,003 | No, I think we have to do this, but I just don't see how to do it. | 20 |
fomc | 2,003 | Well, we can leave it to Vincent to explain it and solve the problem. Would you read the appropriate directive language? | 24 |
fomc | 2,003 | The wording is on page 14 of the Bluebook. For the directive: "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 market... | 169 |
fomc | 2,003 | Call the roll. | 4 |
fomc | 2,003 | Chairman Greenspan Yes. Governor Bernanke Yes Governor Bies Yes President Broaddus Yes Governor Ferguson Yes Governor Gramlich Yes President Guynn Yes Governor Kohn Yes President Moskow Yes Governor Olson Yes President Parry Yes First Vice President Stewart Yes | 50 |
fomc | 2,003 | Where is Michelle Smith? Will you distribute the proposed statement, Michelle? [Pause] | 17 |
fomc | 2,003 | May I speak? | 4 |
fomc | 2,003 | Yes. | 2 |
fomc | 2,003 | I think the statement looks good. It's quite consistent with the last statement, which I gather from our survey is what the markets expect. So in that sense I think this is a good statement. I wouldn't change anything about it. | 46 |
fomc | 2,003 | This, as you notice, is repeating words we've stated previously. I might say that a number of us have been struggling with this whole communication issue. Vincent, do you want to discuss what our plans are on this? | 44 |
fomc | 2,003 | Well, like Governor Gramlich, I am not looking forward to the next meeting. | 17 |
fomc | 2,003 | I'm sorry, I may have cut short the previous discussion. I was assuming because I heard no negative comments that the statement is okay with everyone. But I don't want to assume that. Are there any further comments? Yes, President Moscow. | 48 |
fomc | 2,003 | I think the wording of the last paragraph is a real improvement. The only question I have is in the second paragraph where the term "mixed" is used to describe the labor market indicators. I tend to view them as less positive. | 47 |
fomc | 2,003 | The "mixed" is because of the initial claims data. | 12 |
fomc | 2,003 | But those involve seasonal issues and-- | 7 |
fomc | 2,003 | Yes. | 2 |
fomc | 2,003 | Well, the initial claims are down. And the payroll employment statistics clearly had a bias in them; the seasonal that occurred in the payroll employment series because July 4 was on a Friday is potentially a problem. The unemployment rate came down. The numbers are truly mixed. To say more than that we'd have to add a... | 76 |
fomc | 2,003 | I just hope it doesn't give too optimistic a view of the labor market at this point, which I view as a real question. | 26 |
fomc | 2,003 | Yes. | 2 |
fomc | 2,003 | I'd like to say that in my previous statement I attacked the summary paragraph, but I agree that it's much better this time. It elaborates our assessment of the situation in a more realistic way. | 39 |
fomc | 2,003 | President Minehan. | 4 |
fomc | 2,003 | Could I reflect an opposite concern? Our statement the last time said something along the lines of this wording: The probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation. Therefore, we believe that, on balance, the risk of inflation becoming undesirably low is likely to be th... | 192 |
fomc | 2,003 | The sentence is very consistent with the Chairman's testimony. | 11 |
fomc | 2,003 | That last sentence comes directly from the Chairman's testimony, I think. | 14 |
fomc | 2,003 | Yes. May I suggest something? I have some sympathy for what you're saying. But this is not the meeting to make that change. | 27 |
fomc | 2,003 | I thought we'd come up with a statement from the Committee for this meeting that was as identical to the last one as we could get. That's what I had in mind when I supported the recommendation. | 39 |
fomc | 2,003 | But remember it's a combination of wording that's almost identical to the last statement plus wording from my testimony on monetary policy, which is essentially what we have been using. | 32 |
fomc | 2,003 | Yes. | 2 |
fomc | 2,003 | Also, the definition of what constitutes "a considerable period" is very flexible. | 16 |
fomc | 2,003 | I realize that. But the big surprise of your recent testimony was not this statement about disinflation. It was the relative optimism about the prospects that the economy was going to get better. I thought it was a very balanced statement on your part. The optimism, combined with the ranges of our expectations for grow... | 161 |
fomc | 2,003 | Mr. Chairman, may I speak to this? I see others want to comment as well. | 19 |
fomc | 2,003 | Go ahead. | 3 |
fomc | 2,003 | My sense of the last sentence, Cathy, is that it's actually rather important, given what we've seen in terms of changes in fed funds futures. It's not that I think we ought to attempt to micromanage markets because I know we can't. But in terms of the communications challenge, I do believe that it's quite important for... | 282 |
fomc | 2,003 | I really worry about our trying to target anything in any market with this statement. | 16 |
fomc | 2,003 | I'm not suggesting that we try to target anything. I just want to try to be clear about what we know and what we in this room are sensing. I think the outside world probably hasn't picked that up. | 42 |
fomc | 2,003 | Yes. There is a critical addition to this statement, an issue that wasn't mentioned in the last statement, and that is business pricing power. | 28 |
fomc | 2,003 | Yes. | 2 |
fomc | 2,003 | We tend to talk about inflation in the context of the CPI or the PPI, the usual measures. But really what this whole deflation issue is about is pricing power. There is none out there of which I'm aware. My judgment would be that, as soon as I see the emergence of business pricing power, I would start to think about vo... | 193 |
fomc | 2,003 | I don't debate that at all. I think that's totally accurate. My concern is that this statement introduces yet another slight variance in a market environment that has already been volatile. So I think we'd be better off making the statement plain and simple and letting the market sort things out. Then we can figure out... | 78 |
fomc | 2,003 | Maybe all has been said that can be said, but I want to echo that last comment. I'm uncomfortable with the last sentence, and not because it's not helpful in the current circumstance; I think Ben and Don made the point very well that it is. My concern is that it will be the first time that, as part of the statement, we... | 166 |
fomc | 2,003 | I'd like to hear from the rest of you. I agree with Governor Ferguson that there are slight variations in the way to say this. We could say, for example, "in these circumstances the Committee believes" rather than "the Committee judges." That alternative is perhaps a bit softer; "judges" may be a stronger word. But thi... | 98 |
fomc | 2,003 | I'll suggest a compromise. A lot of people do word counts on these statements--count how often a particular word is used. I think we can convey Roger's sense of the message in that last sentence but cut down the use of the word "disinflation" by one, by dropping "aimed at raising" all the way through to "disinflation."... | 190 |
fomc | 2,003 | On balance, I think it would be preferable to drop the last sentence because it does change the statement, which gets attention, and then expectations change. If we just repeat what we said before, we're signaling to everyone that policy is on hold. In terms of policy announcements or implications, I think that is the ... | 114 |
fomc | 2,003 | I don't wish to imply that the monetary policy report and testimony have the same status as these statements. | 20 |
fomc | 2,003 | No, I'm not suggesting that you are. I'm just saying that having that wording here does tend to bring out the point more forcefully. | 28 |
fomc | 2,003 | President Poole. | 4 |
fomc | 2,003 | Cathy, if I understand what you're saying, you're recommending that we simply drop that last sentence? | 20 |
fomc | 2,003 | That would go a long way. | 7 |
fomc | 2,003 | I would associate myself with that position--whether or not it's yours. | 14 |
fomc | 2,003 | It is. | 3 |
fomc | 2,003 | Dropping the last sentence would be a good idea in my view. I read that next-to-the-last sentence as a pretty clear signal that we're going to be on hold for the foreseeable future because of the concern about a possible further decline in inflation. Making the statement very, very terse, which dropping that last sente... | 113 |
fomc | 2,003 | That's what we did last time. | 7 |
fomc | 2,003 | Yes. | 2 |
fomc | 2,003 | Look at where it got us! | 7 |
fomc | 2,003 | Don. | 2 |
fomc | 2,003 | Actually, I rather like this last sentence or some variation of it, though I recognize that it involves a bit of a risk. But I also recognize, as I think most people around the table would acknowledge, that what is built into the markets now is not what we think is going to happen. That's not to say that we can tell th... | 257 |
fomc | 2,003 | Why doesn't "foreseeable future" do that for you in the context of taking out the third sentence? | 22 |
fomc | 2,003 | I've been listening to this conversation, and I will tell you that there is something to the point that the last sentence is essentially repeating the sentence immediately preceding it. | 32 |
fomc | 2,003 | Right. | 2 |
fomc | 2,003 | It emphasizes it, I think. | 7 |
fomc | 2,003 | If there is any significant doubt among us, we should not decide this issue on a majority vote. If there is a substantial concern among even a large minority of this group, whether they're currently voting members or nonvoting, I think we'd probably be wise to leave it until we can discuss matters more fully in Septemb... | 68 |
fomc | 2,003 | I would appeal to the Committee to retain the sentence because in my view it makes a very big difference. I think the addition of the sentence will go some way to bringing policy expectations in the market toward what I heard around the table during the entire meeting today. It will have a beneficial effect on the Unit... | 143 |
fomc | 2,003 | Just to weigh in on this, I tend to have the opposite point of view from Governor Bernanke. I support Cathy's position for a lot of the reasons that have already been stated. I just don't think this is going to buy us that much. I don't think we need it, given the language in the preceding sentence. Also, I'm a little ... | 141 |
fomc | 2,003 | Governor Bies. | 4 |
fomc | 2,003 | Mr. Chairman, I'm sort of split on the last sentence. I think the final sentence in the second paragraph on pricing power is a really good addition, and I like that a lot. A part of the last sentence that troubles me is the phrase "without ultimately stoking inflationary pressures," which we haven't talked about. That ... | 128 |
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