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The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.


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July 13, 2005


Measured Pace Watch

As noted by Mark Thoma, earlier this week Jeff Lacker, the president of the Richmond Fed, seemingly endorsed the current market view of where the federal funds rate is headed in the immediate future. Today we add Philadelphia Fed president Anthony Santomero to the list:

... I emphasize that it is incumbent upon the Federal Reserve to continue to take the steps necessary to keep price pressures well contained. Just about a year ago, we began the transition from an accommodative policy stance to a neutral one more conducive to sustaining noninflationary economic growth. That process continues.

The task here is to move the interest rate back to a more neutral level without dampening growth in real output, but it is essential for us to ensure our goal of long-term price stability. If the economy evolves as I expect over the next year or so, it is likely we will continue to move the federal funds rate toward neutrality at what we have described as a measured pace.

UPDATE: Mark Thoma correctly points out that I omitted this qualification in President Santomero's remarks:

But, the precise course the Fed takes will very much depend on the precise course the economy takes. We all have our own lists of risks to the outlook that may alter the economy’s course. These must be monitored over the remainder of the year, and no doubt, they will play an important role in determining the course of actual policy.

July 13, 2005 | Permalink

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