Philadelphia Federal Reserve President Anthony Santomero said on Thursday the Fed has room to cut interest rates further if needed. 

``I think we have the ability to do the appropriate monetary policy action as we see it when all of the data are in,'' Santomero told reporters after addressing a National Economics Club luncheon in Washington. Santomero is this year a voting member of the policy-setting Federal Open Market Committee. 

He cautioned against reading too much into the latest round of jobless claims figures, noting that there could be distortions due to the end of the year and seasonal factors. The Labor Department reported earlier on Thursday that the number of workers filing initial jobless claims plunged by 56,000 to a seasonally adjusted 395,000 for the week ended Jan. 5 from a revised 451,000 a week earlier. 

When asked what he would be looking at to assess whether the U.S. economy had recovered from its recession, Santomero said he was keeping a close eye on the labor market, retail sales, inventory levels and events in foreign economies.