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Presentation Materials (920 KB PDF) Pages 91 to 100 of the Transcript Appendix 1: Materials used by Mr. Kos Page 1 Top panel Title: Trade Weighted US Dollar Series: US Dollar Horizon: January 3, 2005 - December 8, 2005 Description: The US dollar index increased. Source: Federal Reserve Middle-left panel Title: Yen/Dollar Series: Yen/Dollar Horizon: January 3, 2005 - December 12, 2005 Description: The Dollar appreciated against the Yen. Middle-right panel Title: Dollar/Euro Series: Dollar/Euro Horizon: January 3, 2005 - December 12, 2005 Description: The dollar depreciated against the Euro. Bottom panel Title: U.S. Trade Weighted Dollar and Current Account Deficit Series: US Dollar and Current Account as a percent of GDP Horizon: 1980 - 2005 Description: The US dollar index decreased and the current account deficit increased. Page 2 Top panel Title: GDP Weighted Sovereign Yield Curves Series: US Treasury Curve, G-7, and G-7 Ex-U.S. for January 3, 2004 Horizon: 3-month, 2-year, 5-year and 10-year Description: Sovereign yield curves increase. Middle panel Title: GDP Weighted Sovereign Yield Curves Series: US Treasury Curve, G-7, and G-7 Ex-U.S. for January 3, 2005 Horizon: 3-month, 2-year, 5-year and 10-year Description: Sovereign yield curves increase. Bottom panel Title: GDP Weighted Sovereign Yield Curves Series: US Treasury Curve, G-7, and G-7 Ex-U.S. for December 12, 2005 Horizon: 3-month, 2-year, 5-year and 10-year Description: Sovereign yield curves increase. Page 3 Top panel Title: Current U.S. and Euro-area 3-Month Deposit Rates and Rates Implied by Traded Forward Rate Agreements Series: LIBOR fixed, 3-month forward, 6-month forward, and 9-month forward for the US and the Euro-Area Horizon: January 3, 2005 - December 12, 2005 Description: The LIBOR fixed, 3-month forward, 6-month forward and 9-month forward for both the US and the Euro-Area increased. Middle panel Title: Current Japanese 3-Month Deposit Rates and Rates Implied by Traded Forward Rate Agreements Series: LIBOR fixed, 3-month forward, 6-month forward, and 9-month forward Horizon: January 3, 2005 - December 12, 2005 Description: The Japanese LIBOR fixed, 3-month forward, 6-month forward, and 9-month forward increased. Bottom panel Title: Global Equity Performance Series: Returns on Local Currency and Returns in US dollar terms for S&P 500, Nikkei, DJ Stoxx, Brazil Bolvespa, and Mexico Bolsa Horizon: January 3, 2005 - December 12, 2005 Description: Global equity performance increased across each of the countries. Page 4 Top panel Title: Emerging Market and High Yield Debt Spreads Series: High yield and EMBI+ Horizon: January 3, 2005 - December 9, 2005 Description: The High yield debt spread widened, while the EMBI+ Index decreased. Source: JP Morgan and Merrill Lynch Middle-left panel Title: Investment Grade Debt Spread Series: Investment grade debt spread Horizon: January 3, 2005 - December 9, 2005 Description: The investment grade debt spread widened. Source: Lehman Brothers Middle-right panel Title: Credit Default Swaps: GM and High Yield Index Series: General Motors, CDX High Yield Index Horizon: January 3, 2005 - December 9, 2005 Description: General Motors credit default swap increased sharply, while the credit default swap of the high yield index increased moderately. Source: Morgan Stanley Bottom-left panel Title: Implied Volatility on the S&P 100 Series: Implied volatility on the S&P 100 Horizon: January 3, 2005 - December 9, 2005 Description: The implied volatility on the S&P 100 is below the average since January 1990. Average Since January 1990: 19.23 percent Bottom-right panel Title: Treasury Yield Implied Volatility Series: Treasury yield implied volatility Horizon: January 3, 2005 - December 9, 2005 Description: The Treasury yield implied volatility is below the average since April 1988. Average Since April 1988: 102.57 basis points Source: Move Index, Merrill Lynch Page 5 Top panel Title: Net SOMA Expansions Series: Net SOMA expansions Horizon: 1995 - 2005 Description: Net SOMA Expansions totaled about $25 billion in 2005 through November. Middle panel Title: Currency in Circulation Series: Currency in circulation (December to December change) Horizon: 1995 - 2005 Description: Currency in circulation increased about $22 billion in 2005 through November. Bottom-left panel Title: Year-Over-Year Currency Growth Rates Series: Currency growth rates Horizon: January 3, 2005 - December 9, 2005 Description: The daily currency growth rate declined. Bottom-right panel Title: Rise and Fall of Currency Levels Around Year-Ends Series: 01 - 02, 02 - 03, 03 - 04, 04 - 05, 05 - 06 (through Dec. 8), and projected 05 - 06 Horizon: November 1 - January 31 Description: Cumulative percent changes from early November show that the greatest change is in late December and then the change shrinks by the end of January. Appendix 2: Materials used by Mr. Madigan Material for FOMC Briefing on Monetary Policy Alternatives Brian Madigan December 13, 2005 Class I FOMC - Restricted Controlled (FR) Exhibit 1 Exhibit 1 reports on recent financial market developments. Top-left panel Expected Federal Funds Rates* A line chart plots the expected path of the federal funds rate derived from federal funds futures on two dates--the date before the last FOMC meeting and the most recent date. The chart indicates that the expected funds rate path has revised up somewhat over the intermeeting period. * Estimates from federal funds and eurodollar futures, with an allowance for term premia and other adjustments. Return to text Top-right panel Probability of a 25 Basis Point Tightening at Upcoming FOMC Meetings* A bar chart compares the probability of a 25 basis point tightening of policy at upcoming meetings computed on the most recent date and as of the date of the prior meeting. The chart indicates slightly higher probabilities of policy tightening at the current and upcoming meetings. * Estimated from federal funds futures. Return to text Middle-left panel Primary Dealer Survey Most expect "accommodation" to be modified or dropped. Half expect "measured pace" to be modified or dropped. Middle-right panel A Case for Firming Policy Today Probably little remaining slack. Considerable economic momentum. Real funds rate near lower end of estimates of equilibrium. Concern about inflationary pressure. Incoming data consistent with continued measured firming. Bottom panel Range of Estimated Equilibrium Real Rates A chart plots the current real federal funds rate along with a range of model-based estimates of the equilibrium real rate. The chart indicates that the current real funds rate is at the lower bound of the range of model estimates of the equilibrium real rate. An explanatory note is provided in Chart 5 of the Bluebook. Exhibit 2 Table 1: Alternative Language for the December FOMC Announcement [Note: In Appendix 2, Exhibit 2, Table 1, emphasis (strike-through) has been added to indicate strike-through text in the original document, and strong emphasis (bold) has been added to indicate red text in the original document.] November FOMC Policy Decision Rationale Alternative B Alternative C 1. The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4 percent. The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4¼ percent. The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4¼ percent. 2. Elevated energy prices and hurricanerelated disruptions in economic activity have temporarily depressed output and employment. However, monetary policy accommodation, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity that will likely be augmented by planned rebuilding in the hurricaneaffected areas. Despite E elevated energy prices and hurricane-related disruptions, in the expansion in economic activity appears solid. have temporarily depressed output and employment. However, monetary policy accommodation, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity that will likely be augmented by planned rebuilding in the hurricane-affected areas. Despite Eelevated energy prices and hurricane-related disruptions, in economic activity the expansion have temporarily depressed output and employment. remains vigorous, supported by However, monetary policy accommodation, coupled with and robust underlying growth in productivity. , is providing ongoing support to economic activity that will likely be augmented by planned rebuilding in the hurricane-affected areas. 3. The cumulative rise in energy and other costs has the potential to add to inflation pressures; however, core inflation has been relatively low in recent months and longer-term inflation The cumulative rise in energy and other costs has the potential to add to inflation pressures; however, c Core inflation has been stayed relatively low in recent months and longer-term inflation Core inflation has been relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, relatively high levels of resource utilization as November FOMC Alternative B Alternative C expectations remain contained. expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures. well as elevated T the cumulative rise in energy prices have and other costs has the potential to add to inflation pressures. ; however, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained. 4. The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. The Committee judges that some further measured policy firming is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. Assessment 5. With underlying inflation expected to of Risk be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability. Return to top Home | Monetary policy | FOMC | FOMC transcripts Accessibility | Contact Us Last update: March 16, 2011 In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives. [Unchanged] [Unchanged]
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