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fomc | 2,003 | Yes, conditional on how the economy is likely to evolve. | 12 |
fomc | 2,003 | I think you said "will be going." You didn't mean to say "will." | 17 |
fomc | 2,003 | May be going. | 4 |
fomc | 2,003 | Yes, may be going. For example, our "considerable period" statement was intended to say--and did in fact say as originally written and before it was amended--that we think inflation will be low for a long period and if inflation remains low, we should be able to keep interest rates low. That was in fact the way it was ... | 103 |
fomc | 2,003 | President Parry. | 4 |
fomc | 2,003 | Mr. Chairman, I was planning to comment on some of the points that were made by Vincent and by implication you as well. Is this the right time? [Laughter] | 36 |
fomc | 2,003 | We're now in open session. | 6 |
fomc | 2,003 | Okay. Let me start by noting that I have never thought it was clear that the post-meeting press release was a statement of the FOMC. I always considered it more the Chairman's statement than the Committee's, and I thought it was presented at the meeting mostly for information purposes about how policy would be communic... | 168 |
fomc | 2,003 | I happen to agree with that and would recommend that heartily, as I've been doing for years without success. Sorry to interrupt. | 26 |
fomc | 2,003 | Again, I'd feel more comfortable voting for a particular risk assessment if I knew in advance exactly how it would be expressed to the public. Given this general principle that the statement should be from the Committee, the remaining questions revolve around how the Committee will draft its statement. One choice to be... | 295 |
fomc | 2,003 | By level you mean what? | 6 |
fomc | 2,003 | Some idea that we're talking about the gap, sort of a Taylor rule. | 15 |
fomc | 2,003 | If we knew what the gap was. | 8 |
fomc | 2,003 | Right. But we know at times that it's getting larger or getting smaller. At least we have some views about that; otherwise it's a little difficult to make policy. | 33 |
fomc | 2,003 | Well, we do have views. But you're going a little further than I think we actually can. Let me raise one question. Unless I'm mistaken, it seems that the actual statement of the balance of risks can be formulaic. I still don't see why it has to be different in the Bluebook and in our statement. What is the argument? I ... | 84 |
fomc | 2,003 | The "coulds," "woulds," and "mights." | 14 |
fomc | 2,003 | It was bizarre. We got rid of the "woulds," "coulds," and "mights," and we were left with still partly archaic language, in my view. Is there any reason that we can't make the statement on which we vote the exact statement that is in the draft press release? | 62 |
fomc | 2,003 | None whatsoever, Mr. Chairman. | 7 |
fomc | 2,003 | What are the arguments against it? | 7 |
fomc | 2,003 | I think we evolved into the current situation by working from what was an imperfect assessment of the risks--that is, the balance of risks language. We tried first to make that sow's ear into a silk purse, and it didn't quite work. Because the statements were changing, it didn't seem possible to be able to present to t... | 133 |
fomc | 2,003 | Well, let's break Bob's argument into two pieces. It seems to me, in the context of what you mentioned earlier, that there is no reason that we can't have in the Bluebook the exact language for various choices on which the Committee might vote, and then that language would appear in the statement. That does not require... | 330 |
fomc | 2,003 | Everything--in the sense that the Bluebook has to be produced after the Greenbook. | 18 |
fomc | 2,003 | Yes, it has to be produced after the forecast, but I'm trying to get at the question of whether there is enough time to get back to Vincent. When does everybody receive the Bluebook? I know when it arrives on my desk. SEVERAL. Thursday. | 54 |
fomc | 2,003 | Thursday, now that it's sent electronically. | 8 |
fomc | 2,003 | Everybody gets it at the same time? | 8 |
fomc | 2,003 | It's posted electronically Thursday night. | 6 |
fomc | 2,003 | Okay, I was thinking in terms of the nineteenth century and delivery by Pony Express! Then there's no problem. I do think we have to have a mechanism, if a significant minority takes issue with certain language, to communicate that by, say, Friday before the Tuesday meeting. We would need some formal mechanism to make ... | 251 |
fomc | 2,003 | When you say get back to Vincent, I want to clarify what you mean. For example, if we use the current Bluebook, the staff set out two alternatives. I assume there would be a discussion about each and the only question would be how the verbiage associated with one of those alternatives should be modified? | 64 |
fomc | 2,003 | Yes, you would call up and say, for example, "I happen to be in favor of alternative 2, but the reasons you give in the Bluebook are not the ones I consider the appropriate reasons for coming to that conclusion." If the staff gives all the potential alternatives, then that's not an arguable issue. The only arguable iss... | 88 |
fomc | 2,003 | I would hope Vincent wouldn't have too great a burden as a result of that. I hope the language would stick to what I'd call the high points. I don't want to use the word "formulaic." | 41 |
fomc | 2,003 | One thing I would point out is that there's a lot of inertia in the words of the first paragraph on the description of the economy. So I think the Bluebook could highlight that, if you decided to take this policy option, say, the sentence characterizing the labor markets presumably would have to change. Implicit in tha... | 122 |
fomc | 2,003 | Okay. President Broaddus. | 7 |
fomc | 2,003 | Mr. Chairman, I would approach this a little differently. I found Vincent's memo very useful in organizing my thinking about this. So, I'd start with his five principles, and I would add a sixth, which is that in communicating with the markets about policy and expectations it's important not to put too big a burden on ... | 751 |
fomc | 2,003 | Let me just comment that we do have an inflation objective. It's called price stability. It's not that we don't have a target; we just don't announce it. It's interesting that the discussion always seems to get to the issue of inflation targeting. The issue is not the pros and cons of announcing a target that we actual... | 879 |
fomc | 2,003 | Can we get that in the minutes? [Laughter] Could I just make one response to that, Mr. Chairman? I certainly hear your comments, and I must say that I don't think that explicit inflation targeting is a silver bullet or that it's going to solve all the problems we face. But in the context of this discussion, I would lik... | 265 |
fomc | 2,003 | Let's take that example. Is there anybody in the marketplace today whom we have failed to convince that we're not going to do anything on the funds rate for a while? Look at the federal funds futures markets. | 41 |
fomc | 2,003 | But we had to make an explicit statement to that effect. | 12 |
fomc | 2,003 | Okay, but let me go further. The scenario is as follows: The core PCE, which is a monthly series, pops above a rate of 1 percent. We are highly accommodative. Do we go back to neutral at that point or when the PCE is at 11/2 percent? What do we do? In short, supposing we do go back to neutral and then find that the nex... | 634 |
fomc | 2,003 | Well, I don't want to take more than my share of time, but I would like to respond to a couple of things you said. The objections you raise are why I said inflation targeting is not a magic bullet; there are problems. If we were explaining why we use inflation targets, I'd say, yes, there would be issues and we would h... | 166 |
fomc | 2,003 | Why not? | 3 |
fomc | 2,003 | Because the inflation measure would still be close to the lower limit of its range. There would still be a risk. This would give content to the statement. | 31 |
fomc | 2,003 | Suppose BEA revises the number from above 1 percent to below 1 percent in the middle of the month? They do revise the numbers. They could publish an initial number of a 1.1 percent annual rate of inflation and find out that they made a mistake. Suppose they then revise their data and move the rate down to 0.9 percent. ... | 80 |
fomc | 2,003 | I don't think we'd necessarily have to do anything in that particular scenario. | 14 |
fomc | 2,003 | I hope not. | 4 |
fomc | 2,003 | I think we could easily explain that. | 8 |
fomc | 2,003 | If we're going to go with inflation targeting--where we actually stipulate what our targets are and say we will act to achieve them--I think we first have to go through a full court press of literally simulating all the situations that could arise and how we might respond. We need to decide what principle will determin... | 141 |
fomc | 2,003 | Mr. Chairman, I'm going to back off of Al's point. I have some sympathy for setting an inflation objective, but I think price stability is the objective. I'm more or less following up on Bob Parry's comments. Where I'm having difficulty with this whole issue is that, to my mind at least, we are introducing a new ambigu... | 95 |
fomc | 2,003 | Do you mean "the considerable period of time" phrase? | 12 |
fomc | 2,003 | Yes, or anything like that. We've moved further away from our boilerplate language in trying to be more explanatory about our actions. As you started out saying this evening, we can't predict the future. None of us can predict the future. Another factor is that the markets receive as much data as we do, and they can ju... | 451 |
fomc | 2,003 | Well, that's a valid alternate procedure. | 8 |
fomc | 2,003 | It's one I think we ought to consider very seriously if we start going down the road of wanting to expand what we say in the press release rather than making it more boilerplate. I have to tell you that I think focusing on those minutes and saying that they are an accurate representation of our discussion would be very... | 98 |
fomc | 2,003 | You would go back to announcing only our action, and you would publish the minutes fairly soon after the meeting? | 22 |
fomc | 2,003 | I would go back to announcing our action. | 9 |
fomc | 2,003 | With no further comment? | 5 |
fomc | 2,003 | With no comment, right. | 6 |
fomc | 2,003 | Then move up the publication of the minutes? | 9 |
fomc | 2,003 | I'd release them as quickly as we can--two weeks after the meeting if that's reasonable--because they provide the explanation for our actions. The market can decipher the minutes. Yes, people may occasionally misinterpret them, but the minutes are our representation of the discussions that occurred at the meeting. And ... | 151 |
fomc | 2,003 | Governor Ferguson. | 3 |
fomc | 2,003 | Thank you, Mr. Chairman. Let me pick up where Tom Hoenig left off and discuss what I think you and Vincent were suggesting. First, I do think there will be some benefit in trying to standardize or routinize the so-called risk assessment. I'll leave out the issue of the "considerable period." To me that's rather close t... | 1,136 |
fomc | 2,003 | President Guynn. | 4 |
fomc | 2,003 | Mr. Chairman, I'm struck by how far we've come since December 1999. I was a relative newcomer at the table when Roger's working group gave its report. I didn't go back and pull the report, but I pulled a sentence from Dave Lindsey's document. It read: "All members of the working group share the objective of reducing th... | 659 |
fomc | 2,003 | What does the Bank of England do with respect to that? | 12 |
fomc | 2,003 | They all sit in the same room and have an editing session. They go through the minutes line by line. | 22 |
fomc | 2,003 | And how many members of the MPC are there? SEVERAL. Nine. | 16 |
fomc | 2,003 | We have nineteen. | 4 |
fomc | 2,003 | I'd hate for us to spend our time doing that. | 11 |
fomc | 2,003 | Remember one thing I said. I said that I'd rather go through this challenge with the minutes than opt to expand the press release. I think there's more danger in the press release if we're going to get prescriptive with it. | 45 |
fomc | 2,003 | As Roger said, there are certain things we can't come back from once we do them. This we can come back from. In other words, one of the reasons I feel somewhat comfortable with what we have been doing is that I think monetary policy is at a major fulcrum in the sense that clearly something different has happened in the... | 221 |
fomc | 2,003 | Thank you, Mr. Chairman. I had a few more comments but in the interest of time I'll quit. | 22 |
fomc | 2,003 | President Minehan. | 4 |
fomc | 2,003 | Thank you, Mr. Chairman. This has been a fascinating discussion, and there are lots of things to say about a lot of issues, but I want to focus on just a few. First of all, I think anyone who has observed the Fed over the last three or four months--including any person in the markets who has criticized us about our com... | 369 |
fomc | 2,003 | They added up the "remotes," as I put it. | 13 |
fomc | 2,003 | Well, it's not so much that they added them up. | 12 |
fomc | 2,003 | No, we created a lot of them. The problem basically is that a number of those in the market don't listen to the subtleties; they just take note of how much time we are spending talking about a particular subject. | 46 |
fomc | 2,003 | Exactly. | 2 |
fomc | 2,003 | You're not suggesting that we have a Politburo here that clears everybody's speeches? | 17 |
fomc | 2,003 | I am not suggesting that at all. I'm just saying that that was the happenstance. We inadvertently added to market volatility. | 25 |
fomc | 2,003 | I agree with that. The question is, what are you recommending that we do? | 17 |
fomc | 2,003 | My recommendation is to proceed very carefully. I don't think there's so much wrong with the current process and the statements we issue that we should jump immediately to a different solution. I have some sympathy for President Hoenig's comments and President Parry's, too, in terms of an easy-to-handle formulaic appro... | 297 |
fomc | 2,003 | First Vice President Stewart. | 5 |
fomc | 2,003 | Mr. Chairman, my approach to this question was to ask a number of top economists for Wall Street firms over the summer whether in their view, in light of the events of May and June, we have a fundamental problem with our communication policy. The answer has been "no." Their sense is that the system works and that it's ... | 383 |
fomc | 2,003 | President Moskow. | 4 |
fomc | 2,003 | Thank you, Mr. Chairman. I agree with the thrust of Jamie's and Cathy's comments. I certainly wouldn't suggest any significant change, though I would suggest some tinkering--some improvement in the processes that we follow and the language we use. On the big question about releasing the minutes early and just announcin... | 862 |
fomc | 2,003 | What could be clearer! | 5 |
fomc | 2,003 | It clearly refers to an elastic period that goes beyond the next FOMC meeting. | 17 |
fomc | 2,003 | President Stern. | 3 |
fomc | 2,003 | Thank you, Mr. Chairman. First of all, I count myself among those who don't think that our current policies are all that bad and in need of a major overhaul. I agree with most, but not all, of the comments that President Moskow just made. So let me offer a few quick suggestions and express a couple of concerns. As I un... | 346 |
fomc | 2,003 | May I interrupt you for one second? | 8 |
fomc | 2,003 | Yes. | 2 |
fomc | 2,003 | That's a very interesting point, and we need some factual information. In the event that we move the minutes up, a concern that has been expressed here--I think Jack raised the issue--is that we all will start to edit the minutes more than we do now. May I just ask for a show of hands on this? Those who would probably ... | 257 |
fomc | 2,003 | That could be. But if Jack is right, I won't take him fishing again! [Laughter] | 21 |
fomc | 2,003 | Continue. | 2 |
fomc | 2,003 | I have a couple of concerns, and one of them Michael just expressed. I don't know what it means to say "the risks to economic growth are weighted toward the upside." Presumably what we mean is that higher growth could lead to higher inflation. But that ought to be captured by the inflation statement. Now, maybe some ot... | 213 |
fomc | 2,003 | I agree with that. Eventually, we'll run into trouble on both of these issues. Not at the moment, though. We're okay for a while because the basic point here is that we're trying to convey why we did what we did. | 47 |
fomc | 2,003 | Right. | 2 |
fomc | 2,003 | Some of the boilerplate language with variations--specifically splitting the Phillips curve into two--actually was essential for us to explain why we did what we did. | 32 |
fomc | 2,003 | I thought that was a very good idea at the time. But we might want to reflect earlier rather than later on how we may want to change this going forward because I do believe that it could get awkward. | 42 |
fomc | 2,003 | There may be an exit strategy issue that we have to resolve. | 13 |
fomc | 2,003 | Right. | 2 |
fomc | 2,003 | Governor Gramlich. | 4 |
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