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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (2585)	8/21/2002 11:57:41 AM
From: Proud_Infidel	Respond to of 25522

Fed President: Current Policy Appropriate By Victoria Thieberger READING, Pa. (Reuters) - Federal Reserve Bank of Philadelphia President Anthony Santomero said on Wednesday that the economic recovery, while more modest than expected, should move forward and that the Fed's current policy stance is appropriate. "I believe the Fed's current monetary policy stance is appropriately supportive of the recovery process," he said, suggesting that Fed policymakers see little need to cut interest rates in the near term despite fears the economy could fall back into recession. Santomero, a voting member on the Fed's interest rate-setting committee, said he expected a slow acceleration in economic activity the rest of the year with "healthy growth" in 2003. The Philadelphia Fed President said that the near-term pattern of monetary policy was difficult to predict with many uncertainties surrounding the economic outlook. But central bankers will have to be prudent to move policy back toward a "more neutral stance" at some point, he said. Santomero said firms have already boosted production to meet rising demand and have stopped laying off workers. Once companies become more confident that the recovery is sustainable, hiring will pick up and business investment will rise -- two factors Fed officials have said are crucial for a solid growth. "For businesses to step up production, hire more workers, and invest in new plants, equipment and software, they must be confident that the economy is coming back and that the demand for their products will continue to grow," Santomero said. "In large measure, that means they must be confident that the consumer will continue to spend," he said. Because consumer spending stayed strong throughout the recession, Santomero said Fed policymakers did not expect the "usual bounce back when the recovery got underway." But he said that as long as consumer spending grows at a modest pace it will support the business recovery. The summer slide in major stock market indexes is not likely to cause a pullback in household spending, he said, noting that sales of houses and cars have stayed strong thanks to lower mortgage rates and zero-percent financing. "I expect consumer spending to continue growing, but this is a risk factor in all our forecasts," Santomero said. Last week the Fed's Open Market Committee downgraded its assessment of the economy to say that further weakness was the greatest danger. But it also said low interest rates and productivity growth should foster a recovery. The Fed's benchmark federal funds rate currently stands at a 41-year low of 1.75 percent.