MR. MOSKOW
And in the event of a sharp drop in housing prices , the odds of a spillover to financial institutions seem limited .
MR. MOSKOW
I wondered whether the price-rent ratios in other countries that may not have had the same degree of financial innovation we 've had differ substantially from ours . ''
MR. RUDEBUSCH
The final hurdle before invoking a Bubble Policy involves assessing whether monetary policy is the right way to deflate the asset price bubble .
MR. RUDEBUSCH
9 , MR. RUDEBUSCH. , '' I will review some general issues related to monetary policy and asset prices .
MR. RUDEBUSCH
A Bubble Policy would go further and try to mitigate the fluctuations in the bubble and achieve an asset price path like AP ′ t .
MR. RUDEBUSCH
Also , during that time , the possible capital misallocation from the run-up in prices and the possible financial instability that might have followed a bursting of the bubble may have appeared difficult to rectify .
MR. OLSON
I think it 's appropriate that we are going to be looking at the issue of real estate bubbles and the speculative component of that market at our meeting in June .
MR. OLSON
The difference was that through their surveys they have been able to isolate the investment purchaser of single-family homes as distinct from the purchaser of a second home .
MR. POOLE
I think a proper policy analysis really ca n't be done on a one-off basis in cases such as the stock market in the ’90s or house prices today . ''
MR. POOLE
Obviously , policymakers would n't apply the instrument when prices are regarded as reflecting the fundamentals , but the instrument would be continuously available .
MR. KOHN
So if we see inflation moving , we 've got to do something about that , whereas we 're not responsible for the relative prices of houses or equity and other things .
MR. KOHN
So it seems to me that it 's one thing to talk about misallocating resources between two states of full employment , but it 's another thing to talk about a misallocation of resources where there would otherwise be slack in the economy .
MR. KOHN
As to this idea that perhaps prices are getting too high relative to rents , I 'd argue that they 're going to come back in line .
MR. KOHN
The resources that went into building houses , furniture , and cars , and so forth might have been unemployed , especially if we had raised rates more in order to lean against the house-price increases .
MR. KOHN
It would be kind of like a supply shock because prices would be rising , inflation would be higher -- and that homeowners ' equivalent rent June 29-30 , 2005 54 of 234 if house prices fall .
MR. STOCKTON
Still , if we 're wrong about this piece of the forecast , I think it goes in the direction that things could be a bit weaker in terms of overall spending by 2007 than we 're forecasting . ''
MS. DANKER
136 , MS. DANKER. , '' I 'll be reading the directive wording from the Bluebook and the assessment of risks from alternative B in exhibit 2 from Brian 's presentation .
MS. DANKER
To further its long-run objectives , the Committee in the immediate future seeks conditions in reserve markets consistent with increasing the federal funds rate to an average of around 4 1/4 percent . ''
MS. DANKER
`` The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output .
MS. DANKER
And the wording for the assessment of risks : `` The Committee December 13 , 2005 90 of 100 attainment of both sustainable economic growth and price stability roughly in balance .
MR. STOCKTON
151 , MR. STOCKTON. , '' Let me make one other point on the reasons why there may have been an increase in the equilibrium price-rent ratio , because I certainly agree with you and President Yellen that there are some good reasons .
MR. STOCKTON
They will address the issues of whose balance sheet the risks reside on and what the consequences might be for household and financial institutions should we get a more serious retrenchment in house prices .
MR. GUYNN
And while the local market excesses probably do not represent systemic national risk , the shakeouts could have serious regional consequences .
MR. GUYNN
With respect to growth , the capital spending survey suggests that planned investment spending in our District remains solid .
MR. GUYNN
-LSB- Laughter -RSB- My supervision and regulation staff thinks this is an accident waiting to happen in our area .
MR. GUYNN
Most of these are largely beyond our June 29-30 , 2005 119 of 234 troubles in our domestic auto industry and , of course , problems in the airline industry .
MR. GUYNN
Florida , as has been the case for some time , has been dominant in terms of both employment growth and the pace of economic activity , given the strength in sectors such as tourism and housing .
MR. GUYNN
-LSB- Laughter -RSB- Our reports indicate that investment spending has also increased in the air cargo freight area , driven by international demand .
MR. GUYNN
I believe that the least risky policy strategy through these unusual times is to set monetary policy so that it does not contribute to unsustainable activities .
MR. GRAMLICH
However , if consumption in fact does depend strongly on interest rates , as our econometricians say , at least some of the crowding-out impact of higher interest rates will be felt by consumption .
MR. GRAMLICH
Today 's policy challenge is to reverse the highly accommodative policy we followed a few years ago in response to what I still think was a real threat of deflation .
MR. GRAMLICH
And the Chairman has run great meetings and has admirably melded our diverse views into a coherent and effective monetary policy .
MR. GRAMLICH
-LSB- Laughter -RSB- This will be my 62nd and last statement at one of these meetings , and if you 'll bear with me I 'd like to give a few parting thoughts before I ride off into the sunset .