Timothy F Geithner: A view from the Federal Reserve Bank of New York Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Business Council of Fairfield County’s Economic Luncheon, New York, 19 January 2005. *  *  *  Thanks for giving me the opportunity to speak to you today. I want to talk about the American economic agenda. And I want to start by looking back at the last decade or so, and the exceptional economic performance of the second half the 1990s in particular. What were the fundamental underpinnings of those achievements, and what are the principal challenges we face to sustaining those achievements? Let me begin by reviewing quickly what distinguished that period of U.S. prosperity, relative to the past in the United States and relative to the other major economies. There are four things in particular worth highlighting: •  First, over this period of the past decade the U.S. sustained very solid growth in the range of 3.5 percent. This was not particularly exceptional relative to the preceding decade, but impressive relative to the other major economies, most of which saw a sustained slowdown in growth. Japan, for example, saw GDP growth slow from above 3.5 to just over one percent. Europe slowed from just under 3.0 percent to about two percent. •  Second, we achieved very moderate inflation.
As regards our present diagnosis on the situation of the Eurozone we are very often asked three questions, namely : “ How do you assess the risks to price stability ? “ “What is your judgment on the present conjuncture in Europe? “ and finally “What about the euro on the exchange markets?”. Let me respond as concisely as possible to these three questions. To the first one I will refer to the analysis displayed, in the name of the Governing Council, by Wim Duisenberg :” after the recent slowdown in monetary growth the risks to price stability from the monetary side have become increasingly balanced. Caution still needs to be exercised ”. As far as the second question is concerned I can also refer to a joint analysis of the Governing Council : “ While downside risks to real GDP growth exist, growth is very likely to continue at a reasonably robust pace.” Finally, as regards exchange rates I will only mention that we are living in a universe of floating exchange system : in such a system exchange rates are not a target but are a pertinent indicator for monetary policy. And I see only one sentence to sum up our position : “ A solid , a strong euro is in the interest of Europe”. Thank you for your attention. *  BIS Review 11/2001  *  *  7