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fomc
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That's indeed what we do.
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In trying to actually write down what was the oral tradition, we did find that not everybody agreed on what it was. One thing was clear: As the Chairman said, the last two paragraphs essentially are viewed as explaining the vote of the Committee. Hence, in those paragraphs, the "members" we talk about are the members o...
69
fomc
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Right.
2
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The problem is if you want to represent everyone's views in the discussion of the economy several paragraphs earlier and you refer to them as "members." Then you've used the same word to describe two different sets of people.
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Are you using "members" in that different way now?
12
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Yes. Unfortunately, it turned out that the rule was that anyone in the discussion was called a member up to the last couple of paragraphs, and then only members were called members in the last couple of paragraphs. That seemed to be an unsupportable inconsistency. We didn't want to exclude nonmembers' characterizations...
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Can't you call the group in the last few paragraphs voting members?
13
fomc
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Yes, right. Why not call them voting members as opposed to members?
15
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The definition of the Federal Open Market Committee is statutory, and there is no such thing as a nonvoting member of the Federal Open Market Committee.
30
fomc
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I was rapped on the knuckles by Joe Coyne fifteen years ago on exactly that point. The membership of the Committee is twelve people, and there is no such thing as a nonvoting member.
42
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Why not call everyone participants in the first part of the--?
13
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We're quite happy to do that, yes.
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That's what he's proposing.
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That's the proposal.
4
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That works.
3
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So up to paragraph 21, or whatever paragraph number it is, if you express a view you're a participant in the meeting. If you express a view that is included in the last couple of paragraphs of the minutes, it's there because you are a member.
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You're a member, right. Okay.
8
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Okay. President Yellen.
6
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Well, just briefly, I'd say that I definitely support the publication of the minutes on an expedited schedule, given that it is feasible. And I agree completely with Don's analysis of the benefits. It does seem to me that, in moving toward perfecting a rational expectations kind of equilibrium, the minutes released in ...
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Governor Olson.
3
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I have two comments. First of all, I see the decision as, on average, a four-week acceleration of the release of the minutes, and therefore I think there are two considerations. One is, Is there a logistical problem with early release? Having had Vincent track me down when I've been away from the office at times, I rea...
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President Pianalto.
4
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Like President Minehan, I thought the experiment on early release of the minutes was motivated by the struggle that we were having in capturing the full sense of the Committee in the few words that are allowed in the press statement. I also have been uncomfortable with the code words that we've been using in that press...
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President Santomero.
5
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When I proposed the experiment on early release of the minutes, I thought that we were addressing a few questions. The first one was, Can we do it? Do we need to change the process? Can we all focus our attention on the minutes, given the time constraints? And given the new proposed process, were we comfortable with wh...
407
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When we started this process, frankly, I was quite dubious that this would be a successful operation. I'm pleased to say that I was mistaken. I thought the staff ran an exceptionally effective demonstration that this is a feasible operation. In the course of discussing the different alternatives as we went forward in t...
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Chairman Greenspan Yes Vice Chairman Geithner Yes Governor Bernanke Yes Governor Bies Yes Governor Gramlich Yes President Hoenig Yes Governor Kohn Yes President Minehan Yes, I guess. [Laughter]
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This, incidentally, is a full vote of both the Presidents and the Governors on the grounds that it's a decision that relates to the policy of the Committee, and all members and potential members, in my judgment, should vote.
46
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Okay. I'll pick up the others in a moment. Governor Olson Yes President Pianalto I can't repeat Cathy's way of saying yes, but--
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"Yes, I guess" is a formal vote.
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Okay. Yes.
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President Poole I'm persuaded. Yes President Guynn Yes President Lacker Yes President Moskow Yes President Santomero Yes President Stern Yes President Yellen Yes First Vice President Holcomb Yes
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I just want to congratulate Vincent on an extraordinarily well-done job.
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Mr. Chairman? I congratulate you, too, Vincent, but may I make one minor suggestion?
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Yes.
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Instead of waiting to announce this in the minutes that will come out right after the February meeting, I would announce it early in January for several reasons. One, I think it would give more time to the markets to be aware of this change. If we put it in the minutes of this meeting, which would be released after our...
126
fomc
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I think that's a good point. But let me ask this: What are the reasons not to announce it earlier?
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Yes. Let me take that a step further. What if we put something about this in our statement today?
22
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Exactly.
2
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I would strongly support that, if you can do it. I would do it as soon as possible. I thought you'd want to draft some wording and have the Committee look at it first.
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Let me put it this way. I heard no discussion here that in any way would preclude announcing this decision today, given that we've come to a conclusion and that it was effectively unanimous--with a couple of "I guess" votes. [Laughter] So unless there's an objection, I would submit that it's certainly possible to do th...
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One possibility, Mr. Chairman, is basically to pick up the language that you, in fact, voted on: "The Committee voted unanimously to begin expedited release of the minutes with the minutes of the February 2005 meeting and to maintain a schedule of releasing the minutes of regular meetings three weeks after the date of ...
125
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Fine. That's excellent.
5
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Mr. Chairman, will there be a question of why we're not proceeding with early release of the minutes for this meeting?
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I'd say it's because the discussion of this issue occurred subsequent to the vote on the policy decision.
19
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Should there be some discussion about nineteen votes versus twelve in that statement?
14
fomc
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Let me go back. That would be the answer, but we could certainly move it up if--
20
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As long as we're into this, what's the problem? If we can release the February minutes in three weeks, why can't we release today's minutes in three weeks?
32
fomc
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We could release these minutes in three weeks, if you so direct. I thought there were certain advantages to having a paragraph or two explaining why the Committee made this decision and giving details of how the Committee would do this going forward before those in the market actually got the first release.
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Is that really necessary?
5
fomc
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Not if you say it isn't. [Laughter]
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fomc
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Well, I think the logic of our decision forces us into the position of doing precisely what Governor Gramlich is suggesting. Let me ask, Are there any dissents to actually releasing the minutes of today's meeting on an expedited basis?
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May I suggest one possible benefit of waiting?
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By all means, go ahead.
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You can all shout it down, but it occurs to me that one possible benefit is to give people who follow our every word--and there are many people around who do--a longer period of time to get used to the idea and to read the minutes of some previous meetings in the context of what was going on at the time. They could cal...
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Three weeks is a long time. [Laughter]
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All right. I'm willing to be shouted down on that. But that's the only reason I can think of for waiting.
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Are there any arguments that anyone can think of? The date these minutes would be released would be January 4. If it were Christmas Day, I think it would create a problem.
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Mr. Chairman, either we are going to do this or we aren't. We can't start out by immediately saying, "Oh, well, that date is not very convenient."
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Let's at least think of what we intend to do. The proposition currently on the table is (1) to announce that we're going to release the minutes early and (2) to do it in three weeks. I haven't heard serious objections, nor have I heard serious reasons--which are far more important--not to proceed. So unless I hear obje...
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So be it.
4
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Mr. Chairman, just one more question or suggestion for Vincent. Maybe you've already considered this. When you release the minutes for the first time, you might want to consider adding some of the Secretariat's clarifying information about the conventions in the language--an explanation of some of the terminology. I do...
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I did want to make clear the distinction between "participants" and "members."
16
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And the hierarchy of the language around the terms "majority" and "several" and so forth might be helpful, too.
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We thought of making a little index card that we could hand out to Fed watchers. [Laughter]
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We can expect to be asked if we are one of the "few" or one of the "many."
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May we leave that issue of explaining the terminology to the Secretariat to make a judgment on? SEVERAL. Yes.
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In that event, I want to confirm that the dates of our next meeting are Tuesday and Wednesday, February 1 and 2, 2005. This meeting is adjourned, and we are off to have lunch with our former colleague, Bob McTeer.
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Today is our regular annual organizational meeting and, as is customary, I will turn the floor over to Governor Ferguson.
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Thank you very much, Mr. Chairman. At the first regularly scheduled Committee meeting of every year, our first obligation is to elect a Chairman and a Vice Chairman to serve until the election of their successors at the first regularly scheduled meeting of the next year. So let me now open the floor for nominations fro...
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I nominate Alan Greenspan to be Chairman.
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And do you have a nomination for Vice Chairman?
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I nominate Timothy Geithner as Vice Chairman.
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Is there a second to those nominations? SEVERAL. Second.
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Any other nominations? Any objections? Any comments? Well, we're not in an era of great democracy. [Laughter] Let the record show a unanimous vote for Messrs. Greenspan and Geithner to be Chairman and Vice Chairman of the FOMC until its first regularly scheduled meeting of 2006. Congratulations.
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Thank you very much. I wish to note that there was no voter fraud that I could perceive. [Laughter]
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And we have a turnout of 100 percent!
10
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The next item on the agenda is the selection of staff officers. Would you kindly read the list for us, please?
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Yes. For Secretary and Economist, Vincent Reinhart; Deputy Secretary, Deborah Danker; Assistant Secretary, Michelle Smith; General Counsel, Scott Alvarez; Deputy General Counsel, Thomas Baxter; Economists, Karen Johnson and David Stockton; Associate Economists, Thomas Connors, David Howard, Brian Madigan, Steven Oliner...
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I'll entertain a motion for the proposed slate. SEVERAL. So moved.
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Without objection, that is approved. The next item on the agenda is the selection of a Federal Reserve Bank to execute transactions for the System Open Market Account. My notes indicate to me, and I quote, "New York is the odds-on favorite." [Laughter] In that event, not wishing to go against the odds, I will entertain...
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Well, consistent with the odds and tradition, I will nominate the Federal Reserve Bank of New York.
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The nomination is approved without objection. Since we have done that, let's move to a decision that may be far more important, which is to select the Manager of the System Open Market Account. I understand that there's only one name on this ballot, and it's Dino Kos. Unless anyone has an objection, I will presume that...
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Thank you, Mr. Chairman. I have two subjects on which I'll need a vote from the Committee. The first one is on the Foreign Currency Directive, the Authorization for Foreign Currency Operations, and the Procedural Instructions with Respect to Foreign Currency Operations. I recommend that they be approved with no amendme...
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Questions? Objections? If not, they are approved.
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The second item is the Authorization for Domestic Open Market Operations, which I propose be approved with one amendment as described in the memo dated January 24, 2005. That amendment would eliminate the so-called leeway provisions--the limit on the amount by which holdings of securities in the System Open Market Acco...
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Any questions? Approved without objection. We have received documents on proposed revisions to the Committee's rules, statements, and resolutions, and I presume you have read them. I need a vote to approve the proposed revisions, but, obviously, if there are comments, we will discuss them prior to that. Hearing none, t...
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So moved.
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Approved without objection. We have an annual review of the Committee's Program for the Security of FOMC Information. I'd like to emphasize a point covered on page 1, which is that individuals who have access to confidential information may provide it to or discuss it only with those Federal Reserve employees who are a...
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Mr. Chairman, I think the leak of the topic for today's discussion, which was the subject of an article that appeared in The Wall Street Journal, was very disappointing and troubling. I've been with the Federal Reserve for10 years, and we pride ourselves on being an organization with very high integrity. When we have a...
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I'm at a loss to understand the motives of communicating obviously confidential information that could compromise the nature of our deliberations here. What is to be gained? I don't get it. All I can do is to reiterate, as we vote on this, that we take it very seriously. I will assume everyone is in the affirmative on ...
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1 Thank you, Mr. Chairman. We'll be referring to the package of material entitled "Considerations Pertaining to the Establishment of a Specific, Numerical, Price-Related Objective for Monetary Policy." As a prelude to your discussion this afternoon, Doug Elmendorf and I will briefly summarize some of the main points ma...
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If the Committee chose to specify a numerical price-related objective, it would need to resolve a number of operational issues--the subject of your next exhibit. The top left panel of the exhibit presents a checklist of these issues. The first item is the choice of a price index. We favor consumer prices on several gro...
1,511
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The Committee's discussion of the relative merits of an explicit quantification of its price objective is likely to be complicated by consideration of how to govern the process of choosing an objective and how to communicate it to the public and the Congress. I believe that the decision tree provided in exhibit 5 can h...
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Thank you. Let's just open the floor to general questions and see where our conversation leads us. Who would like to raise the first issue? Governor Bernanke.
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Thank you, Mr. Chairman. I know I'm not the median voter on this issue, so mostly I'd like to listen today. But I have just a couple of comments. The staff did an excellent job of laying out the costs and benefits of a specific numerical objective for inflation. They noted quite carefully that the empirical evidence is...
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I think you're raising a very important first question. Are we, in fact, all in agreement that low inflation is a desirable goal? If we don't come to an agreement on that, the rest of the conversation, in my judgment, is moot. So it might not be a bad idea to put that question on the table. I have always presumed, judg...
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Mr. Chairman, I would just add one perspective on that, which relates to how businesses reacted when the Fed really started to bring inflation down in '79, '80, and '81. One of the challenges that a lot of companies faced in that period was that they had gotten so accustomed to being able to raise prices automatically-...
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Well, I think the original purpose of the actions that were taken in October 1979 was to break the back of that general structure. At the time, the evaluation of the evolving inflationary forces was--and I think quite accurately--that we were getting very close to a highly unstable system. The assessment was that if th...
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Thank you, Mr. Chairman. First of all, I am a firm believer that low and stable inflation is of paramount importance for an economy to have long-term health. I've held that view for a long time, having experienced some of the effects in our region of an inflationary cycle and the washout that comes with that. Let me sa...
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