Greenspan Says Prospects for U.S. Economy Brightened

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Last updated at: (Beijing Time) Thursday, April 18, 2002

Greenspan Says Prospects for U.S. Economy Brightened

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U.S. Federal Reserve Chairman Alan Greenspan told the Congress on Wednesday that prospects for the U.S. economy have brightened and he sent a clear signal the central bank is in no rush to raise interest rates.

In a testimony on the economy at the Joint Economic Committee, Greenspan noted some encouraging signs of economic recovery, saying demand seems to be increasing for some forms of high-tech equipment, including semiconductors and computers.

He noted that spending in the household sector has held up welland there are signs of improvement in business profits, a key to allowing businesses to boost investment spending.

He predicted the recovery in overall business investment this year is "likely to be gradual."

Greenspan said that inflation pressures are well-contained despite surging oil prices.

"To be sure over time, the current accommodative stance of monetary policy is not likely to be consistent with maintaining price stability. But prospects for low inflation and inflation expectations in the period ahead mean that the Federal Reserve should have ample opportunity to adjust policy to keep inflation pressures contained once sustained, solid, economic expansion is in view," he told the Congress.

Greenspan's testimony was right in line with the expectations of most private economists. They predict the central bank will begin to raise rates but probably not until August, with policy-makers preferring to allow the recovery from the last year's recession to take hold.

Last December, the Fed completed its most aggressive rate-cutting campaign in decades, pushing the funds rate down to a 40-year low of 1.75 percent.

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