FOMC/FOMC20050630meeting/FOMC20050630meeting--137.txt MR. MOSKOW And in the event of a sharp drop in housing prices , the odds of a spillover to financial institutions seem limited . FOMC/FOMC20050630meeting/FOMC20050630meeting--137.txt 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 . '' FOMC/FOMC20050630meeting/FOMC20050630meeting--11.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--11.txt MR. RUDEBUSCH 9 , MR. RUDEBUSCH. , '' I will review some general issues related to monetary policy and asset prices . FOMC/FOMC20050630meeting/FOMC20050630meeting--11.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--11.txt 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 . FOMC/FOMC20050322meeting/FOMC20050322meeting--132.txt 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 . FOMC/FOMC20050322meeting/FOMC20050322meeting--132.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--79.txt 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 . '' FOMC/FOMC20050630meeting/FOMC20050630meeting--79.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--166.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--166.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--166.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--166.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--166.txt 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 . FOMC/FOMC20051213meeting/FOMC20051213meeting--54.txt 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 . '' FOMC/FOMC20051213meeting/FOMC20051213meeting--138.txt 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 . FOMC/FOMC20051213meeting/FOMC20051213meeting--138.txt 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 . '' FOMC/FOMC20051213meeting/FOMC20051213meeting--138.txt MS. DANKER `` The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output . FOMC/FOMC20051213meeting/FOMC20051213meeting--138.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--153.txt 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 . FOMC/FOMC20050503meeting/FOMC20050503meeting--172.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--356.txt MR. GUYNN And while the local market excesses probably do not represent systemic national risk , the shakeouts could have serious regional consequences . FOMC/FOMC20050630meeting/FOMC20050630meeting--356.txt MR. GUYNN With respect to growth , the capital spending survey suggests that planned investment spending in our District remains solid . FOMC/FOMC20050630meeting/FOMC20050630meeting--356.txt MR. GUYNN -LSB- Laughter -RSB- My supervision and regulation staff thinks this is an accident waiting to happen in our area . FOMC/FOMC20050630meeting/FOMC20050630meeting--356.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--356.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--356.txt MR. GUYNN -LSB- Laughter -RSB- Our reports indicate that investment spending has also increased in the air cargo freight area , driven by international demand . FOMC/FOMC20050630meeting/FOMC20050630meeting--356.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--382.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--382.txt 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 . FOMC/FOMC20050630meeting/FOMC20050630meeting--382.txt MR. GRAMLICH And the Chairman has run great meetings and has admirably melded our diverse views into a coherent and effective monetary policy . FOMC/FOMC20050630meeting/FOMC20050630meeting--382.txt 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 .