MR. PLOSSER
The coincident indicators in our Business Outlook Survey suggested that economic activity continues to expand at a moderate pace in each of our three states , and the business contacts expect that pace to continue .
MR. PLOSSER
This observation is also consistent with the views that mortgages rates are still relatively low and that credit spreads show less stress on businesses at this point .
MR. LACKER
So it 's not clear that inflation compensation and inflation expectation measures are contained in a way that 's consistent with a long-run inflation objective around 1.5 percent .
MR. LACKER
The worse inflation outlook now indicates that , if anything , the real short rate should be higher than otherwise warranted by real growth considerations .
MR. LACKER
100 , MR. LACKER. , '' As I outlined earlier , my sense is that , after having largely eliminated resource underutilization , the economy is now fluctuating around potential .
MR. MOSKOW
We 're going to get some further bad news on inflation in the coming months , and I hope the markets will maintain their confidence in the Federal Reserve .
MS. PIANALTO
I am concerned that we do n't yet have a good handle on where house prices are headed and how the uncertainties surrounding house prices might affect consumer spending .
MS. PIANALTO
Second , the support to consumption provided by cash-out refinancing is not likely to be available going forward to the same degree that we 've had during the past several years .
MS. PIANALTO
The Greenbook points out that the OFHEO price index is still increasing a bit , but the builders I met with convinced me that the published prices for new homes do n't accurately reflect market conditions .
MS. DANKER
Chairman Bernanke Yes Vice Chairman Geithner Yes Governor Bies Yes President Guynn Yes Governor Kohn Yes Governor Kroszner Yes President Lacker Yes Governor Olson Yes President Pianalto Yes Governor Warsh Yes President Yellen Yes ''
MS. DANKER
Chairman Bernanke Yes Vice Chairman Geithner Yes Governor Bies Yes President Guynn Yes Governor Kohn Yes Governor Kroszner Yes President Lacker Yes Governor Olson Yes President Pianalto Yes Governor Warsh Yes President Yellen Yes ''
MR. MADIGAN
If the Committee saw significant potential for inflation to exceed expectations , it might believe that another 25 basis point increase in the federal funds rate is necessary to balance the risks .
MR. MADIGAN
Reflecting our own sense of uncertainty about the Committee 's future actions , in the August Bluebook we presented four , rather than the usual three , alternatives for 2 The materials used by Mr. Madigan are appended to this transcript -LRB- appendix 2 -RRB- .
MR. KOS
Those market participants that are bearish on interest rates and the economy point to data hinting at softness , such as signs of a slowdown in housing .
MR. KOS
These market participants see either a quick end to the tightening cycle or a swift reversal toward policy easing later this year .
MS. DANKER
Chairman Greenspan Yes Vice Chairman Geithner Yes Governor Bies Yes Governor Ferguson Yes President Guynn Yes Governor Kohn Yes President Lacker Yes Governor Olson Yes President Pianalto Yes President Yellen Yes ''
MR. MADIGAN
While maintaining the current stance of policy , the Committee might believe that the risks remain tilted to the upside , as noted at the bottom of the exhibit .
MS. DANKER
Chairman Bernanke Yes Vice Chairman Geithner Yes Governor Bies Yes President Guynn Yes Governor Kohn Yes Governor Kroszner Yes President Lacker Yes President Pianalto Yes Governor Warsh Yes President Yellen Yes ''
MS. DANKER
And `` Although the moderation in the growth of aggregate demand should help to limit inflation pressures over time , the Committee judges that some inflation risks remain .
MR. POOLE
Incidentally , the market inevitably reads any hint about the fed funds rate target as applying primarily to the next meeting .
MR. POOLE
If the Committee adopts the risk statement in alternative B , I ask that the minutes explain that at least one member strongly favored a balanced risk assessment .
MR. POOLE
But given the information currently in hand , I believe that it is improbable that the Committee would vote to raise the fed funds rate target in January or March .
MR. POOLE
I would observe that the Greenbook forecast of a prolonged period of an inverted yield curve has no historical precedent .
MR. POOLE
I would not like to see a mixed market signal because I would not want the market to believe that continuing weakness in housing would deflect us from acting as necessary to keep inflation from rising further .
MR. REINHART
10 , MR. REINHART. , '' Mr. Chairman , I would note that the first place I could find mention of the Federal Reserve 's asking about paying interest on reserves was in 1965 .
MR. KOS
Interestingly , the markets shrugged off the Chairman 's speech on November 28 and other comments by Committee members that focused more on inflation risks .
MR. KOS
Similarly , in the middle panel , the VIX -LRB- Chicago Board Options Exchange Volatility Index -RRB- has fallen back to levels last seen a decade ago .
MR. KOS
As shown in the two top panels on page 3 , the major equity indexes have had strong rallies since midyear .
MR. KOS
Then on August 24 , Japan released revisions to the CPI , which showed that inflation had been lower than previously reported .
MR. KOHN
In sum , Mr. Chairman , I 'm a bit more comfortable with something like the path for the economy and inflation in the Greenbook forecast , but uncertainties are quite high .
MS. DANKER
Chairman Bernanke Yes Vice Chairman Geithner Yes Governor Bies Yes President Guynn Yes Governor Kohn Yes Governor Kroszner Yes President Lacker No Governor Mishkin Yes President Pianalto Yes Governor Warsh Yes President Yellen Yes ''
MS. DANKER
`` The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output .
MR. STERN
Finally , we have looked at some forecasting equations that try to incorporate the growth in the money supply in particular and to forecast core PCE inflation .
MS. SMITH
Chairman Bernanke Yes Vice Chairman Geithner Yes Governor Bies Yes President Guynn Yes Governor Kohn Yes Governor Kroszner Yes President Lacker No President Pianalto Yes Governor Warsh Yes President Yellen Yes ''