Payment of interest on these balances is our principal tool for keeping the federal funds rate in the FOMC’s target range. This tool has made it possible for us to gradually return interest rates to a more normal level without disrupting financial markets and the economy.
In line with the Stability and Growth Pact, it is not opportune to use these extra revenues for higher spending. Now is the time to speed up fiscal consolidation in order to help to reduce further the debt-to-GDP ratios in the Community and to approach more quickly fiscal budgetary positions in surplus or balance.