[In the post-Greenspan era] Policy will less often be reacting to fluctuations in actual or expected inflation, and will more often be realigning real interest rates in response to changing economic fundamentals.

The next chairman will start with a base of institutionalized market confidence, but the market will naturally be somewhat skeptical until the new chairman has established his or her own track record.

Market confidence in the Federal Reserve’s ability and willingness to maintain a low trend rate of inflation has been a core characteristic of the Greenspan regime...Examination of current survey data and the spread between the yields on conventional and indexed Treasury bonds indicates that market confidence in continuing low inflation extends well beyond Greenspan’s tenure as Chairman. Institutionalizing market confidence in the Federal Reserve is a great accomplishment.

I have more in common with you graduates than people might think. After all, before long, after my term at the Federal Reserve comes to an end, I too will be looking for a job.

It is understandable that the markets ask what happens when a central banker of this caliber goes. But they will find out that the FOMC has 19 members and that our decision process remains mainly unchanged.

The Federal Reserve’s monetary policy actions under Alan Greenspan have probably also been quite consistent with what would have been done under an inflation-targeting regime. Furthermore, as I have pointed out elsewhere (Mishkin, 2000), the United States has a nominal anchor that has been very effective in recent years—it is Alan Greenspan. Thus it is not at all clear that adoption of inflation targeting in the United States would have improved recent monetary policy performance. However, there is still a strong argument for adoption of inflation targeting by the United States. No matter how good a nominal anchor Alan Greenspan is, he won’t be around forever.

Normally, I would agree with Bill Poole about intermeeting moves. I don’t think it’s a good idea to count on them very often. But the interval between our March 20th and May 15th meetings is a long one and we know, as does everybody else, that we’re probably going to cut rates further. To delay that gives a rather perverse incentive to the market that makes it more attractive to sell stocks in order to buy bonds. While I accept your point that it would be desirable for the stock market to get its legs on its own and not through action by the Federal Reserve, there is another thing to consider. And that is that we have just had two days of really good stock market performance.

So if we were to cut the target funds rate today, we couldn’t be accused of doing so because of the stock market. Later in this 10-day window, that may not be the case. We may get to the point where we want to cut the rate in the next 10 days and the stock market environment will make the Greenspan “put” come alive again. So, I was disappointed to hear that you didn’t want to make a move today. I think we really should cut the funds rate today.

I would not only reappoint Mr. Greenspan - if Mr. Greenspan should happen to die, God forbid, I would do like we did in the movie, 'Weekend at Bernie's.' I'd prop him up and put a pair of dark glasses on him and keep him as long as we could.