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FRBSF University Symposium

FRBSF University Symposium. Board of Governors Governor Frederic S. Mishkin Gene Mitchell Kristie Bush Stephanie Johnston Daniel Roe. LEI Comparisons. Forecasted GDP Growth (FRBSF): 2.5% - 2.75% constant growth rate for Q4 2006 and 2007. LEI –Conference Board Month LEI Difference

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FRBSF University Symposium

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  1. FRBSF University Symposium • Board of Governors • Governor Frederic S. Mishkin • Gene Mitchell • Kristie Bush • Stephanie Johnston • Daniel Roe

  2. LEI Comparisons • Forecasted GDP Growth (FRBSF): • 2.5% - 2.75% constant growth rate for Q4 2006 and 2007. • LEI –Conference Board • Month LEI Difference • July 06 138.1 • Aug 06 137.6 -0.5 • Sept 06 137.7 0.1 • Oct 06 138.3 0.6

  3. Expectations • Expectations of the future environment (prices) will direct current behavior. And current behavior will determine the future environment. • Price Stability will lead to higher real economic growth, “sustainability” of the economy, and lower risk. • We believe that the current posture is communicating an environment of accepted inflation (price instability) to keep the economy expanding.

  4. Action Recommendations • Increase rates to achieve price stability. • Communicate that price stability is the key to real economic growth and is the primary goal of monetary policy. • As the rate becomes neutral, allow the economy to fluctuate in the short term and continue to expand the money supply to accommodate growth, but not to have it be a primary cause.

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