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fomc
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Thank you. I will call on Brian Madigan.
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2 Thank you, Mr. Chairman. Financial markets were subject to a number of crosscurrents over the intermeeting period. Nonetheless, most financial market prices showed relatively small net movements over the period. As indicated in the top left-hand panel of exhibit 1, line 1, yields on short-term Treasury coupon issues ...
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Questions for Brian?
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Just a clarification. You have alternative C and then you actually have an alternative C', with alternative C focusing on energy prices as a growth issue--or at least having a potential impact on growth--and C' focusing on energy prices and business costs as an inflation issue.
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Yes. I wouldn't focus solely on energy costs, but that was the intent--to highlight that in particular as well as other elements of costs that are putting pressure on prices.
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What would sentence 3 look like under alternative C'? That wasn't very clear.
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We'd simply say, "Output appears to be growing at a moderate pace, but the earlier rise in energy prices and an acceleration of business costs have the potential to contribute to upward pressure on prices."
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So you'd have "moderate pace" and "prices" juxtaposed there. Then you'd have, "Labor market conditions continue to improve."
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That's correct.
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Further questions of Brian? [Pause] I actually have very little to add to what has been said so far. It is probably worthwhile reiterating, to emphasize it, that the policy we have been engaged in is largely the consequence of the fact that we've had a very shallow recession and we have not had a recovery that is typic...
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I support your recommendation.
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President Moskow.
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I support your recommendation, Mr. Chairman.
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President Stern.
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I, too, support your recommendation, and I agree that this is not the time to try to fine-tune the signal. I don't think the case is sufficiently compelling to do that.
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President Poole.
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Mr. Chairman, I support your recommendation. I would note, given the expectation I think we all have that another 25 basis points may be appropriate at the next meeting, that any change in wording is going to send a mixed signal that will be confusing. So I support alternative C.
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Governor Bernanke.
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I support the recommendation.
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First Vice President Holcomb.
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I support the recommendation.
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Governor Olson.
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I support the recommendation.
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Governor Bies, raise your hand, please. [Laughter] [Secretary's note: Governor Bies indicated her support of the recommendation.]
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President Guynn.
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Mr. Chairman, I support your recommendation. I would say, again, that I don't think "moderate pace" actually describes the conversation around the table this morning. But I agree with others that this is not the time to play with a word like that.
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President Santomero.
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I support your recommendation, Mr. Chairman.
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President Pianalto.
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I support your recommendation, Mr. Chairman.
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President Lacker.
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I support your recommendation, Mr. Chairman. I'm happy to finish the year holding the all-time Committee record for highest fraction of meetings at which I've raised interest rates. [Laughter]
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President Minehan.
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I support your recommendation. I could have gone with a simpler version of sentence 3 that would say, "Output appears to be growing at a moderate pace, and labor market conditions continue to improve," because I think the reference to the earlier rise in energy prices and the gradual nature of the improvement in labor ...
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Could I interpose here? I would just note that we do have one slightly negative statistic--one that historically has always been exceptionally useful--and that is the initial claims for unemployment insurance. They've gone up in the last couple of weeks. We think it's a Thanksgiving seasonal-adjustment problem. But in ...
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I don't want to debate the data with you because you're far better at analyzing them than I am. [Laughter] But I do take some comfort in the average monthly growth in payroll employment over the entire year.
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Governor Kohn.
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Thank you, Mr. Chairman. I support your recommendation. I see an important difference between us and the tennis player. When the tennis player runs back to the center of the court, the ball is already flying over the net. His running to the center of the court doesn't affect the way the game turns out. [Laughter] As we...
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I acknowledge your superior strategy. [Laughter]
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I'm not in favor of tightening so that we can ease at some point in the future. I'm in favor of tightening because it's the right thing to do now.
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I was referring mainly to the possibility that we might look back in retrospect and find that real underlying inflation had been moving faster than we had expected. I'm merely suggesting to you that if our paradigm--which specifies that slowed productivity does not affect prices until it takes its full cut out of profi...
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Thank you for that clarification, Mr. Chairman.
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Governor Gramlich.
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Thank you, Mr. Chairman. I support your recommendation. However, if I could substitute my own analogy for change--
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Oh, no! [Laughter]
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I rule that the Vice Chair is out of order! [Laughter]
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The ship is sailing along, but I do think there's an iceberg out there. Now, we may avoid it. I don't want to say we're going to hit it, but I do think one is out there.
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I'm sorry I raised the analogy. [Laughter] Governor Ferguson.
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I'll simplify things again and just support your recommendation.
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Vice Chair.
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I support your recommendation.
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President Yellen.
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I support your recommendation, Mr. Chairman.
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The Secretary will read the appropriate language.
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I'm reading from the Bluebook, page 13, for the directive wording: "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 m...
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The press statement clearly is the statement referenced in the table under alternative C. I won't distribute these copies unless somebody needs to check the wording. Would you call the roll, please?
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Chairman Greenspan Yes Vice Chairman Geithner Yes Governor Bernanke Yes Governor Bies Yes Governor Ferguson Yes Governor Gramlich Yes President Hoenig Yes Governor Kohn Yes President Minehan Yes Governor Olson Yes President Pianalto Yes President Poole Yes
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Let's have a short recess so that the Board of Governors can address the requests of the Bank directors for discount rate changes. [Recess]
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We'll turn now to Mr. Reinhart.
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3 Thank you, Mr. Chairman. In the not inconsiderable number of discussions of communications policies over the past few years, members have often brought the meeting minutes into the mix. For those in favor of expediting the release of the minutes, the benefits of such a change, as listed in the top left box of your fi...
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Thank you. Let me start with three preliminary comments. First, I congratulate the staff on the way this experiment was conducted. I think that we've learned a lot from it, and I think that the early drafting of the minutes, in any event, will survive and should survive. So I want to start with that observation. Second...
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I think we should speed up release of the minutes to about three weeks after the meeting, along the lines of the new schedule that Vincent suggested. I agree that there are risks and potential costs, but I think they are partly within our ability to control and they are outweighed by the potential gains. Potential gain...
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Thank you. The floor is now open for discussion.
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I'll speak first, partially because I've spent five years working with Vincent on getting us to this happy place, and I don't share his sighing about it. I think expediting the release of the minutes is a useful step for the Committee to take. My views on this, I must admit, have changed. The last time we discussed thi...
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President Stern.
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Thank you, Mr. Chairman. I've felt for a long time that the minutes, given the way we currently handle the timing of their release, are an unappreciated or at least underappreciated asset. So I continue to strongly favor moving up the release date. I think Don basically made the case, so let me just quickly summarize t...
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Governor Bernanke.
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I support the expedited release of the minutes. I think we should point out that on a number of occasions this year the delayed release of the minutes has actually confused the market--stepped on our message from the most recent meeting by sending a somewhat different signal. And although I don't have a lot of market c...
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Vice Chair.
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I support early release. We don't have to do this, but I think it's the sensible thing to do, and I think it's the sensible time to do it. I can't improve on the arguments made in favor of it by Don, Gary, and Ben. I would say, Bill, that the argument you led off with is sort of an argument for extending the delay and ...
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Governor Hoenig.
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I support early release of the minutes, Mr. Chairman. I have for some time. I think it will give a better sense of the Committee's views and the process of its thinking with regard to policy, and I believe that will serve the market well.
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President Minehan.
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I think the experiment to date has been a very good one. It has produced a much higher quality initial product because it's written closer to the time of the meeting. Personally, I have had no problem keeping with the tight schedule, despite a couple of late comments on my part, and I want to congratulate the staff on ...
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Governor Gramlich.
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I would support early release. I would do it unequivocally. Unlike Cathy, I don't view this as something under the conservation of law and information here. So if we give out more information sooner, I don't think we have to take anything back. In particular, I think the statements are working very well now, and I woul...
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President Guynn.
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Mr. Chairman, like Roger, I was in the group originally that was very uneasy about this. But I've come to the other side and believe that, on balance, it is probably the thing to do. Let me mention just a couple of thoughts, without completely repeating what others have said. I would also commend Vincent and the staff ...
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President Moskow.
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Mr. Chairman, I think that the experiment was very helpful. My own feeling is that releasing the minutes early will provide useful information to the markets. I think it will help us communicate better. I agree, as others have said, that it will be very helpful in our speeches and interviews. And other central banks ar...
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President Lacker.
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I strongly support expedited release for a lot of the reasons that Governor Kohn and others have expressed. I have a general predilection toward more transparency; the more information in the markets, the better. I just want to make three points. One is that bringing this information out earlier in time would resolve u...
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Is that true?
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In the last several paragraphs, which bear only on the policy decision, a statement refers only to comments made by members. Before that, in the discussion of the outlook, the minutes reflect the entire go-around, so it includes all participants at the table.
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I think that's the logically necessary position for this Committee to take.
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Which one?
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The one just enunciated by Vincent.
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In the material Debbie circulated last week, the proposal was to make the distinction sharper by talking about members and other participants in the earlier section. But, again, when it comes to who voted on the policy decision, it's only members.
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Suppose we had a situation in which the nonmembers held different views from those who voted but then we show a unanimous vote. We'd get a lot of comments as to why the indicated vote was wrong. We can't do it that way. The voting members have one privilege and one privilege only: They get to vote on the policy at that...
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Mr. Chairman, let me just say a couple of things. First, there is this mechanism for distinguishing between members and nonmembers. So a view about policy could easily be attributed to a nonmember. Second, many statements about the economy by members as well as by other participants seem integrally linked with their st...
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No, that is not the purpose. The purpose is essentially to give the reasons why we voted the way we did.
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Well, that's a different philosophy; I'll grant that.
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It has always been that way. The point is that, if you divide the Committee into two separate groups and then discuss what those who voted on the particular statement thought and what those who didn't vote thought, we are actually no longer talking about the Federal Open Market Committee. The Federal Open Market Commit...
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May I ask a clarifying question?
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Yes.
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Vincent, in the discussion in the minutes that refers to the first part of the meeting on the outlook, where you use the terms "most," "many," and "several," is the denominator--
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It is nineteen.
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Could I just say something? We are really discussing two things here. One is the issue of members versus nonmembers--I would use the terms voting members and other members, but be that as it may--and whether you discuss all of their perspectives in the last part of the minutes on the policy discussion. Then there's the...
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Well, you don't have to do that. The basic statement is that in that last section of the minutes we are merely stipulating "the reasons for the policy decision." In that context, only the views of those who actually voted on the policy are included, and we don't make reference to anybody else.
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That's exactly what I am suggesting to you to do.
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