Federal Reserve chairman Alan Greenspan today warned that uncertainties related to the confrontation with Iraq posed "formidable barriers" to business spending and made it tough to gauge the US economy's health. "The intensification of geopolitical risks makes discerning the economic path ahead especially difficult," Greenspan said in remarks prepared as part of his semi-annual report on the economy and monetary policy.
Only a break in the tensions would provide a clear view of whether the economy in on firm footing, Greenspan said. However, he said that Fed was of the opinion that the economy was solid, although it was not totally sure. "If these uncertainties diminish considerably in the near term, we should be able to tell far better whether we are dealing with a business sector and an economy poised to grow more rapidly - our more probable expectation - or one that is still labouring under persisting strains and imbalances that have been misidentified as transitory," Greenspan said. //www.fxcentre.com