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fomc | 2,003 | It used to be there. Let me tell you what the alternatives seem to be coming down to. I would say that we have two choices. Either drop the sentence completely, or just say, "In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period." I hate to ask for a vote, ... | 153 |
fomc | 2,003 | Could you read it again, please? | 8 |
fomc | 2,003 | Yes. In fact, let me read the whole last paragraph. I think that's a better way of doing it. "The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome fall in inflation exce... | 125 |
fomc | 2,003 | "Judges" or "believes"? You said "believes" the first time. | 19 |
fomc | 2,003 | I know, and the reason I changed it was because I had "The Committee believes" in the preceding sentence. I'll put it back to "believes" and use "judges" in the previous sentence. Can I see a show of hands on dropping that last sentence completely? | 57 |
fomc | 2,003 | Those who prefer to drop it? | 7 |
fomc | 2,003 | Yes, to stop at the phrase "the risk of inflation becoming undesirably low is likely to be the predominant concern for the foreseeable future." That's the end of the statement, period. Let's get a count. | 43 |
fomc | 2,003 | Everyone, both voting and nonvoting members of the group? | 13 |
fomc | 2,003 | Yes, in this case it should be voting and nonvoting members on the grounds that this is a procedural question and I think everyone's voice should be heard. So, can I just see by a show of hands those who prefer to drop the sentence completely? One, two, three, four, five, six, seven. It's seven of nineteen? | 71 |
fomc | 2,003 | Eighteen. | 4 |
fomc | 2,003 | Bob McTeer had to depart to catch a plane. | 12 |
fomc | 2,003 | Well, on the basis of that vote it's right on the margin. But I would say that we have to put in the truncated version of the final sentence. | 32 |
fomc | 2,003 | I think that's right. | 5 |
fomc | 2,003 | And we will revisit this issue because this whole question is going to be a very important one. Finally, Vincent you can get your few words in. Maybe there's nothing left to say! | 37 |
fomc | 2,003 | Mainly, I should issue a warning that the next meeting will be a long day for you. We'll reconvene the meeting after lunch to talk about both the process and the content of the press statement. That will be the first item of discussion on communications. And then, depending on the outcome of that discussion, we'll ask ... | 88 |
fomc | 2,003 | So that means the discussion on communications next time would not affect our statement after the September meeting. Is that right? | 23 |
fomc | 2,003 | I don't know practically how to do it any other way because-- | 13 |
fomc | 2,003 | The meeting could start at 5 o'clock in the morning. | 13 |
fomc | 2,003 | We could start at 5:00 p.m. For someone from California that would be easier! [Laughter] | 24 |
fomc | 2,003 | Well, we can start at 7:30 a.m. and serve breakfast. | 17 |
fomc | 2,003 | If that's what you would like, we can do that. | 12 |
fomc | 2,003 | I should just let you know that the media people know exactly when each FOMC meeting begins. We'd have to explain to them that the meeting started at 7:30 a.m. and give them some reason for that. Otherwise we could see some excitement out front. | 55 |
fomc | 2,003 | I see. Do we have to announce that in advance? | 12 |
fomc | 2,003 | We announce when the meeting begins. Typically the media people wait on the phone until 9:00 a.m., and someone from our office scurries back to the phone and says the meeting began at 9:00 a.m. | 48 |
fomc | 2,003 | What happens if we're two minutes late? | 8 |
fomc | 2,003 | We would tell them it started at 9:02 a.m. | 14 |
fomc | 2,003 | It's also the case that they often--but not always--ask when the meeting ended. So we may very well have to explain why the meeting has been extended if we reconvene after lunch. | 39 |
fomc | 2,003 | Can we have a dinner meeting the previous night without creating a big problem? | 15 |
fomc | 2,003 | As sort of an intermeeting meeting? | 8 |
fomc | 2,003 | Governor Gramlich has an insight. | 7 |
fomc | 2,003 | I don't have an insight. I have a question. I've been worried about this increasingly as our meetings have gotten longer. What happens if we're not done at 2:15 p.m., the time we usually release the press statement? | 47 |
fomc | 2,003 | We haven't had to face that. [Laughter] | 11 |
fomc | 2,003 | Good answer. | 3 |
fomc | 2,003 | We don't commit to having the statement out at 2:15 p.m. It has just been our practice to release it then. | 27 |
fomc | 2,003 | We don't commit to a time? | 7 |
fomc | 2,003 | Right. | 2 |
fomc | 2,003 | So it's easier to go beyond the typical time period on that end than it is on the other? | 20 |
fomc | 2,003 | I gave you a bit of a legalistic interpretation. These people will get a little crazy if they don't hear something from us around the usual time. | 30 |
fomc | 2,003 | Governor Ferguson has an interesting recommendation. | 7 |
fomc | 2,003 | Well, it's a procedural recommendation. I think we could easily have a dinner meeting the previous night, and we could treat it as we do any other intermeeting discussion. | 34 |
fomc | 2,003 | If an intermeeting discussion is held, it wouldn't be announced until later. | 15 |
fomc | 2,003 | Yes, we announce it the way we did it after-- | 12 |
fomc | 2,003 | Oh, I thought you were talking about having a conference call. | 13 |
fomc | 2,003 | Well, we could have a conference call. Either we could have a conference call to discuss communications, or we could do it in person. But in either case, we'd announce the fact that we met for an intermeeting discussion in the same way that we announce conference calls. | 55 |
fomc | 2,003 | A conference call for this type of discussion is very difficult to do. | 14 |
fomc | 2,003 | Yes, I think we'd want to discuss this issue in person. But I would say--and frankly I don't know if you'd want to handle a breakfast meeting this way--that theoretically we could argue that we would treat a breakfast meeting as though it were any other intermeeting discussion. And we would announce that in the usual w... | 76 |
fomc | 2,003 | Have a breakfast from 7:30 to 9:00 a.m. | 16 |
fomc | 2,003 | The breakfast would be from 7:30 to 9:00 a.m., and then the regular meeting would begin at 9:00 a.m. | 32 |
fomc | 2,003 | Then the meeting begins. That's a little sneaky. | 11 |
fomc | 2,003 | Well, it's legal in terms of our definition of a meeting, [laughter] but I think it's easier to handle the dinner meeting in that way. | 31 |
fomc | 2,003 | That's why we need lawyers. | 6 |
fomc | 2,003 | No, that's why you don't need lawyers! [Laughter] I would suggest that we have the dinner meeting; it's easier to bifurcate that from the regular meeting and treat it the way we do any other intermeeting discussion. | 47 |
fomc | 2,003 | It also gives us more flexibility and time. | 9 |
fomc | 2,003 | Yes, it also gives us more flexibility and time. | 11 |
fomc | 2,003 | Okay. We will arrange a dinner on Monday before the next meeting to discuss communications. | 17 |
fomc | 2,003 | Is it anybody's birthday, incidentally? [Laughter] | 13 |
fomc | 2,003 | You need to announce the date of the next meeting before we close today. | 15 |
fomc | 2,003 | The next meeting is September 16. We will get together on Monday night, September 15, for a dinner and discussion. | 26 |
fomc | 2,003 | I realize that we all have to eat dinner, and we all shall. But it's pointless not to use this time for more important things. For example, Michelle Smith has volunteered to give us a lecture on the epistemology of the ancient Spartans, and I thought we might want to keep our ears tuned to her accent as she does it in ... | 2,185 |
fomc | 2,003 | 1 Thank you, Mr. Chairman. I'll be referring to the materials that were at your seats when you came in, but you also received a copy of these materials from me last Thursday. Please bear with me, but I'd like to begin on a note of parliamentary procedure. It seemed to stretch to the breaking point any interpretation of... | 2,688 |
fomc | 2,003 | Let me just add to Vincent's comments. The procedures we currently are using to communicate are essentially ad hoc. They have been working in the sense that we have succeeded in releasing by 2:15 p.m. on the day of the meeting a press statement on which we've gotten the general agreement of the Committee. This has noth... | 785 |
fomc | 2,003 | Yes, in January. | 5 |
fomc | 2,003 | I do think that our experience of the last several years highlights the difficulties we confront in trying to reach a consensus when we have a range of opinions on one issue or another. We have to solve that problem. As far as I can see, the problems we've had in shifting to the kind of statement we've issued recently ... | 328 |
fomc | 2,003 | What I'd like to do first is to open up the floor for questions to Vincent. Then I'd like to have those who want to make small presentations of their points of view, which are somewhat different from or in contradiction to Vincent's, take the floor for an appropriate amount of time. After that we'll have an open discus... | 109 |
fomc | 2,003 | Mr. Chairman, I have a question about something you said. I'll ask for Vincent's interpretation of it so I can get this question on the table now. [Laughter] You were talking about wanting to inform the market about our outlook for the future. I think that's what you were saying in your opening comments. | 64 |
fomc | 2,003 | Well, going all the way back, that's what the tilt does. | 14 |
fomc | 2,003 | That's what I want to clarify. Are we talking about the risks we see today and how we interpret those risks? Or are we talking about taking the statement further, as we did last time, in terms of policy in the foreseeable future? What is the intent? | 53 |
fomc | 2,003 | It could be both. | 5 |
fomc | 2,003 | Okay. | 2 |
fomc | 2,003 | First of all, there really is no such thing as an accurate forecast. We don't have any capacity as such to forecast how the economy will evolve. All we're doing is extrapolating current imbalances and assessing how they might resolve themselves in the future. I'm merely communicating that, in my judgment, we have to go... | 184 |
fomc | 2,003 | I think it's important to be clear what we mean when we talk about the future. If we're talking about the balance of risks we see today based on the information currently available, that's one thing. If we suggest that our assessment of the risks implies a future action on our part, then I think we've gone beyond what ... | 74 |
fomc | 2,003 | I would say that we have to be very careful not to commit the Committee to any series of future actions, which would necessarily imply that we know how the economy is going to evolve. We may feel reasonably certain about it, but we've been wrong too often in the past; and I think the cost of a mistake of that sort is v... | 74 |
fomc | 2,003 | That's helpful to me. Thank you. | 8 |
fomc | 2,003 | Let me say this. I think what we have been doing is fine. For example, I would not have changed anything that we've done in the past two or three months on the basis of what has been happening in the marketplace and what people have said. My own judgment is that, if the economy in June had looked the way it did in Apri... | 249 |
fomc | 2,003 | Right. | 2 |
fomc | 2,003 | President Poole. | 4 |
fomc | 2,003 | Mr. Chairman, if I may, I'd like to follow up on the discussion that Tom Hoenig-- | 21 |
fomc | 2,003 | Remember, these are questions for Vincent. We haven't gotten to members' views on the substance. | 19 |
fomc | 2,003 | Okay. Let met try to sharpen this issue by saying that I think we need to make a clear distinction between two types of comments in our press statement. One type is a hint or guidance about the likely level of the federal funds target at our next meeting or the one after that and the other is a conditional statement ab... | 77 |
fomc | 2,003 | May I interrupt you? You're into part two of this discussion. You may have the floor after people have asked questions or clarifications of Vincent. There may well be some questions or clarification issues, so let's get those out of the way and then move on. | 52 |
fomc | 2,003 | Well, I guess I'm saying that I didn't think that distinction was very clear in what Vincent had put on the table. | 24 |
fomc | 2,003 | That's what you're going to tell us about in a few minutes after others have raised their questions! [Pause] Well, maybe Vincent has been perfectly clear. Does anybody else have questions for Vincent on the substance of what he said? If not, President Poole. [Laughter] | 57 |
fomc | 2,003 | 2 I prepared two charts and, if I may, I'll pass them around. There are certainly enough for everyone at the table and probably for those sitting on the perimeter as well. I'll wait until the charts are distributed. The purpose of my exploration here was to try to get a sense of how frequently the economic situation ha... | 699 |
fomc | 2,003 | I'm surprised that the correlation is as good as it is. | 12 |
fomc | 2,003 | It's only a three-month horizon. | 7 |
fomc | 2,003 | I understand that, but actually I would have expected a wider scattering than your chart shows. | 18 |
fomc | 2,003 | I think the reason the scatter is as narrow as it is reflects the fact that there are a lot of observations when not much is going on and the market doesn't expect much, if any, changing. The first part of 1997 was such a period, when the rate stayed in a very narrow band for a while. Obviously, the 1991-92 period was ... | 322 |
fomc | 2,003 | Anybody can jump in on the discussion. I'll just give my initial response to President Poole's observations. I think you're describing the way the markets work and raising the question of whether information helps the markets. Let me give an example of something not dissimilar to the markets we're dealing with, namely ... | 578 |
fomc | 2,003 | With regard to anchoring expectations, I absolutely agree with respect to the long-term inflation rate. I think anchoring those expectations is critically important. But you've yet to convince me that anchoring expectations on the number of basis points the federal funds rate is going to move over a period of a relativ... | 64 |
fomc | 2,003 | Well, if it were not instructive, this correlation would be a random distribution or it would be negative. Remember, it's not negative. | 28 |
fomc | 2,003 | No, I don't draw that conclusion because even if we didn't say anything about the probable direction of the federal funds rate, the market would have some understanding of how the economy is likely to evolve. For example, there's a lot of persistence in real GDP and employment changes. So the market has some understand... | 199 |
fomc | 2,003 | I agree with what you just said. Take as a given that the availability of factual information about the economy is an ongoing phenomenon and that the market is responding as it does in a fairly sophisticated way. The question is, if we superimpose on them our view of the outlook, do we do harm, are we irrelevant, or do... | 194 |
fomc | 2,003 | Yes, of course. | 5 |
fomc | 2,003 | I take that as evidence that we are making a contribution over and above the evidence of how the economy is doing because the market's assessment of that evidence is already built in when we make our statement. I grant you that part of what's built in is an expectation of what our statement will be, but this does not s... | 112 |
fomc | 2,003 | I would say that providing guidance on our thinking about the direction of the real economy and the inflation outlook is constructive. What I am concerned about is providing guidance about the likely level of the federal funds rate at the next meeting or the one after that. | 50 |
fomc | 2,003 | Well, I hope we're trying not to do that. I would agree with you on that. We should not be trying to communicate what we're going to do at the next meeting; if we believe that an action needs to be taken, we might as well do it now. | 55 |
fomc | 2,003 | I'm trying to sharpen that distinction. | 7 |
fomc | 2,003 | If that's the conclusion you're reaching, I'm on your side on that argument. | 15 |
fomc | 2,003 | I also agree with you on that, Bill. The technical distinction you're making, as you mentioned in your remarks, relates to the idea that the economy is in a rational expectations equilibrium where everyone has the same information. In that case, anything the Fed says is going to be redundant. On the other hand, as the ... | 441 |
fomc | 2,003 | And depending on how the economy evolves. | 8 |
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