Judged by the relatively low level of inflation and the healthy state of U.S. economic conditions, the Federal Reserve’s monetary policy under Chairman Greenspan has been successful. But domestic and international conditions are always changing and challenging the Fed’s conduct on monetary policy. What are the current challenges facing the Federal Reserve and a new chairman? Presently, amid widely anticipated interest rate hikes and its efforts to be more transparent, the Fed faces a number of crucial issues. What is the economic and inflation outlook, and what are the biggest risks? Should the Fed alter its policy in response to large fiscal deficits? What are the implications of the large current account deficit? Does the specific language used by the Fed contribute positively to its attempt to be transparent? Can the Fed maintain its credibility to keep inflation low under a new chairman? The members of the SOMC will address these and other leading issues. They will also provide advice on the conduct of monetary policy as the country considers the end of Chairman Greenspan’s long, successful tenure.