28 February 2001, 17:38 ANALYSIS: GREENSPAN MON-POL TESTIMONY REMAINS MKT-FRIENDLY>
WASHINGTON (MktNews) - In his second take on the future of monetary
policy, Federal Reserve Chairman Alan Greenspan provided something for
everyone by suggesting further rate cuts are possible but that the U.S.
economy is already showing signs of doing better.
Greenspan's prepared text for testimony before the U.S. House of
Representatives Committee on Financial Services contained changes on
two key pages (page 3 and page 7) and in the summary. It gave the Fed
leeway to ease more but added little to the debate about the timing or
amount of ease.
Greenspan said economists should continue scrutinizing consumer
confidence for clues about the future, but he continued to refer to the
sudden slowing in the U.S. economy as an inventory problem.
Greenspan said, "The exceptional degree of slowing so evident
toward the end of last year (perhaps in part the consequence of adverse
weather) seemed less evident in January and February. Nonetheless, the
economy appears to be on a track well below" potential and the "risks
continue skewed toward the economy's remaining on a path inconsistent
with satisfactory economic performance."
However, Greenspan suggested weakness in home and auto sales has
been modest - so consumers "retained enough" confidence.
The new summary says "The Fed has quickened the pace of adjustment
of its policy." What is not clear if that will also apply to future
rate cuts.
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