Santomero on monetary policy and the economy
"With output growth somewhat above its long-run potential, job growth sufficient to put us on a course toward full employment, and inflation low and stable -- then I expect we will be moving the federal funds rate up at a measured pace, as the FOMC indicated," he said, referring to the statement issued by the rate-setting Federal Open Market Committee a week ago.
A rate increase wouldn't represent "a shift from stimulative to restrictive monetary policy," Santomero said in remarks prepared for the Market News International Forum in New York.
"As long as the level of interest rates is relatively low, monetary policy is stimulating more rapid growth in spending," Santomero said. "So, moving along a path from the current federal funds rate to a neutral federal funds rate simply represents a gradual reduction in the degree of stimulus."
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Speech by Anthony M. Santomero, President of the Federal Reserve Bank of Philadelphia to the Market News International Forum, New York, NY, 11 May 2004.
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