On the risk of the Fed losing credibility: Of course there's always a risk. But we watch pretty carefully and we don't want to see that risk materialize. Certainly as long as I have anything to do with this process I will be pushing hard for a policy that is as tight as it has to be, as disciplined as it has to be, to keep long-run inflation within bounds. And that would be lower than today's inflation.
{Our response} depends on what we know about why {inflation is} hanging high, if that's the hypothesis we're exploring. We need to look at why and we need to look at the various lags in this system.
If we believe that we're headed off in the right direction then we can be patient. We can be patient and sit there and not create a disturbance in the economy.