Federal Reserve chairman Alan Greenspan has offered a cautiously optimistic appraisal of the US, stating that the economy is continuing to work its way through the soft patch. The central banker, whose "soft patch" comments have haunted the market since they were first uttered last month, made his comments in a speech to the Economic Club of New York. He said that the economic recovery "ran into resistance in the summer" due to the renewed weakening in equity prices, further revelations of corporate malfeasance and heightened geopolitical risks, but last month's 50 basis point rate cut provided "some insurance" against the possibility that the weakening would gain a footing.
"The United States is nowhere close to sliding into a pernicious deflation," he added. "The limited evidence since the November easing [of monetary policy] has supported our view that the US economy has been working its way though a soft patch - and that patch has certainly been soft," Greenspan said. //www.fxcentre.com