By Joseph Plocek WASHINGTON (MktNews) - Federal Reserve Board Chairman Alan Greenspan's Congressional testimony was balanced, leaving open the door for further interest rate cuts but also warning that stimulus already in the banking system should soon take effect. Greenspan summed up the situation by saying, "The period of sub-par economic performance... is not yet over, and we are not free of the risk that economic weakness will be greater than currently anticipated, and require further policy response. That weakness could arise from softer demand abroad as well as from domestic developments. But we need also to be aware that our front-loaded policy actions this year coupled with the tax cuts under way should be increasingly affecting economic activity as the year progresses." Thus the testimony noted the substantial 275 basis points of Fed ease to date, inflation risks and economic worries at the same time. It would appear from the central tendency estimates that the Fed is willing to see slow growth in 2001, provided it is accompanied by lower inflation and signs of recovery for 2002. The central tendencies are for real GDP to rebound to +3-3.25% in 2002, with the PCE price deflator at +1.75%-2.5%. The comparable numbers for 2001 were lowered to +1.25%-2% real growth in 2001, versus the +2-2.75% original estimate in February; and +2-2.5% in the 2001 PCE deflator, versus the +1.75%-2.5% estimated in February. Greenspan said it is "notable how well the US economy has withstood the many negative forces" but "risks would seem to remain mostly tilted toward weakness." He said "Should conditions warrant, we may need to ease further." The big worry to the up-side: "At some point, inventory liquidation will come to an end, and its termination will spur production and incomes." Risks: weak demand for cap-eqpt "could pose a continuing problem; lower equities and reduced household wealth could cut consumption; weakness abroad.