MS. PIANALTO
-LSB- Laughter -RSB- Now , turning to inflation , I am hearing reports of upward price pressures across a handful of industrial commodities , and notably for metals .
MR. GAGNON
Readings from futures markets imply a flattening out of nonfuel commodity prices and only a moderate increase in oil prices going forward .
MR. GAGNON
This projection is driven by the historical tendency of U.S. imports to grow at a much faster rate than U.S. GDP .
CHAIRMAN BERNANKE
A number of participants referred to the strength of the global economy , which is stimulating U.S. exports but also leading to increases in costs of energy and metals .
MS. PIANALTO
My business contacts are telling me that capital investment is a bit soft , but it should not at this point pose a serious problem for the overall economy .
MR. STOCKTON
But that reacceleration of activity is limited by a diminishing impetus to consumer spending from housing wealth and a reasonably restrictive monetary policy .
MS. YELLEN
With regard to inflation , I expect core PCE inflation to remain around 1 3/4 percent over the next several years .
MR. HOENIG
152 , MR. HOENIG. , '' Thank you , Mr. Chairman , now that I have everyone 's attention , -LSB- laughter -RSB- I 'm going to start with some information on the District and then talk briefly about the national economy from my perspective .
MS. YELLEN
In addition to tighter financial conditions , lower structural productivity growth was the reason that we lowered our forecast for real GDP growth to 2 1/4 percent in 2008 .
MS. YELLEN
A key development during the intermeeting period was the downward revision of real GDP growth over the 2004-06 period .
MS. YELLEN
I thus think that a larger decline in the fed funds rate will be needed over time than in the Greenbook baseline to achieve a soft landing .
MR. SHEETS
The spot price of WTI is trading today at nearly $ 92 a barrel , up $ 5 since the Greenbook went to bed .
MR. FISHER
We differ significantly , Mr. Chairman , from the central assumption of the Greenbook in our views on headline inflation looking forward .
MR. FISHER
The bottom line , Mr. Chairman , is that , there is clearly a fat left tail on growth -- the economy is growing slower .
MS. YELLEN
This forecast is predicated on continued well-anchored inflation expectations and the eventual appearance of a small amount of labor market slack .
MR. STOCKTON
In fact , the payroll employment figures are slightly stronger than we expected at the time of the October Greenbook .
MR. LEAHY
As shown to the right , fixed investment spending as a share of GDP has moved up a couple of percentage points since 2003 .
MR. LACKER
It 's tempting to extrapolate this favorable news forward as the Greenbook does and forecast a gradual downward drift without further overt action by the Committee .
MR. DUDLEY
The strong demand for the credit derivatives obligations created from subprime mortgage products has restrained the rise in credit spreads .
MR. LOCKHART
Reports from banking contacts suggest that delinquency rates on nonprime ARM loans in Florida will continue to trend higher this year .
MS. JOHNSON
The effects of this more benign level for oil prices would be slightly positive for real GDP growth both in the United States and abroad .
MR. PLOSSER
It 's important to note that , for a good part of the forecast for the fourth-quarter GDP , it 's payback for strong inventories and net export numbers in the third quarter .
MR. PLOSSER
According to our Business Outlook Survey , manufacturing activity in the District has been increasing at a modest pace for the past few months .
MR. PLOSSER
Credit constraints experienced by the large money center banks have not appreciably affected the banks in our District or their lending practices .
MS. YELLEN
The extraordinary run-up in house prices in recent years led to construction and sales booms that could n't last .
MS. YELLEN
However , as noted in one of the Greenbook alternative simulations , greater business pessimism about future returns to new capital is also a significant risk .
MS. YELLEN
Recent data on economic activity have been downbeat in many sectors , and I agree with the general tenor of the Greenbook that the near-term outlook is weaker than before .
MR. KROSZNER
The financial markets outside of housing have generally had fairly significant improvement , although a lot of brittleness remains .
MR. MISHKIN
I was really pleased because the Greenbook has basically moved closer to the picture that I had all along ; so now I 'm very comfortable with the Greenbook forecast .
CHAIRMAN BERNANKE
I should be clear -- the Greenbook already incorporates a considerable slowdown in commercial real estate , but that means it will no longer offset the residential slowdown .
MS. JOHNSON
The lower path for U.S. GDP growth going forward is the primary explanation of our downward revision to projected import growth .
MS. JOHNSON
Of course , the baseline path for U.S. real GDP takes into account the lower imports and the simultaneous nature of the determination of GDP and its components .
MS. YELLEN
On the one hand , the very sluggish real GDP growth in the first quarter gives me pause concerning potential downside risks .
MR. POOLE
Perhaps what is going on here is simply what is also in the Greenbook 's second-quarter numbers , because the goods part of the economy -- consumption -- is pretty flat .
MR. LACKER
The main shift in my perspective since the last meeting is that I am now at least as pessimistic as the Greenbook about prospects for housing bottoming out anytime soon .
MR. ROSENGREN
My own view is that residential investment is likely to be as weak as in the Greenbook forecast but that potential may be closer to Boston 's estimate .
MR. ROSENGREN
The Boston staff forecast is somewhat more optimistic on residential investment but also has somewhat higher potential than the Greenbook forecast .
MR. FISHER
At home , we 're seeing unacceptably high and sustained wage developments for certain critical components of labor , which I mentioned earlier .
MR. STOCKTON
Karen will discuss the external sector , which is expected to be a smaller drag on output in this forecast compared with our previous one .