• Important Fed be free of political pressure
  • Points to record; inflation has averaged 2% over last 5 years, though volatile due to commodities
  • FOMC discussed nominal GDP as a variable to be considered; not contemplating radical change of framework
  • Understands dissatisfaction on economy but Fed criticism based on misconceptions; Fed protected banking system, not bankers’ salaries
  • Fed could stay on hold later than mid-2013; markets anticipate that
  • Fed could return to Treasuries-only portfolio someday but housing sector a big reason why recovery slow; would consider more MBS buying if conditions appropriate (QE3)
  • Fed not MF Global’s regulator; Primary dealership not a seal of approval; suffered no losses on failure; no financial stability impact
  • Low mortgage rates have not been as effective at reviving economy as hoped
  • Has accomplished price stability both from a deflationary and inflationary perspective
  • Economy would have been in a deeper ditch, unemployment higher without Fed action
  • MBS purchases and Treasury purchases along with communications are sets of tools which can be used if needed; Falling inflation and insufficient growth could be catalysts for corrective action; remains prepared to take action as appropriate
  • European bank capital not comparable with US bank capital: Basel III will be implemented by the US
  • Fed is highly accommodative now; being very aggressive, prepared to take further action, based on developments if appropriate
  • Fed had overestimated pace of recovery; there has been an element of bad luck; Europe, Japan, etc.
  • Americans tightening budgets, paring down debt; be smart about finances
  • Can’t dissociate ourselves from Europe; hopes for policy action to reduce headwinds from Europe
  • Monetary policy and lender-of-last-resort policy available if Europe worsens
  • Cyclical unemployment can become structural if left too long
  • Q3 growth improved, looks to carry through to Q4; outlook remains unsatisfactory in next few years, will continue to evaluate if more accommodation needed.