William J. McDonough

At the risk of being somewhat unpleasant, I’d also like to say that I think we have a particular problem at the moment. This is a time when it is highly vital that we get all the information we can, but that is being made somewhat difficult by the fact that we are looking at ourselves in the mirror because of what I view as too many statements by Fed officials. We are all in a position where making statements about policy is a temptation. But let me suggest that that is something we don’t have to do. If I can hold myself up as an example, there was a Dow-Jones report yesterday about my comments at a conference sponsored by the U.K. Financial Services Authority. The report said that my remarks “largely repeated recent speeches on the Basle Accord, but failed to touch on the U.S. economy. McDonough, a voting member of the Federal Open Market Committee, declined to discuss monetary policy with reporters.” Now, other than patting myself on the back for virtue, there is a reason I raise this point. Even though we may believe that a recovery in the second half of the year is likely, when we say that publicly a degree of certainty is being postulated that I find very troublesome. It makes it difficult for the Federal Reserve to move if we decide in this period that we wish to do so. More generally, this is the time of year when I think one should be honoring Passover and the Christian holidays and I believe that in both of those religions silence is considered a great virtue.

I entered the weekend with a view that we ought to ease by 25 basis points and over the course of the weekend changed my opinion. Somewhat symbolically I have a pond behind my house in Westchester County and there are a lot of fish in the pond. Therefore, I have two hawks, and the hawks enjoy fishing in the pond. This is a true story, though what will follow is not true. [Laughter] This past weekend--now we get into mythology--one of the hawks miraculously turned into a beautiful white dove. I was very confused until I realized that what was even more miraculous was that the dove spoke with a southern accent! [Laughter] And that convinced me even more that the 50 basis point move was appropriate.