Greenspan in no hurry to increase rates

The Federal Reserve Chairman Mr Alan Greenspan goes before Congress later today to offer what economists believe will be a cautious…

The Federal Reserve Chairman Mr Alan Greenspan goes before Congress later today to offer what economists believe will be a cautious take on the US economy and a possible signal the central bank is in no hurry to raise interest rates.

The Fed cut the benchmark federal funds rate 11 times last year to a 40-year low of 1.75 per cent in one of its most aggressive campaigns ever against economic weakness.

But now a recovery looks to have taken hold and markets will be watching closely for clues on the timing of interest rate increases when the US central bank chief goes before the congressional Joint Economic Committee at (2 p.m. Irish Time).

Earlier this year, Mr Greenspan told Congress the US economy appeared to be well on its way toward recovery from the recession that began a little over a year ago, but he warned of an array of influences that would likely moderate the speed of expansion.

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When he last spoke on the economy a little over a month ago, he said there was little scope for a significant pick up in household spending and that a rise in corporate profits and business investment - which led the economy into recession when they weakened - would be key to sustained growth.

Economists expect the powerful central banker, armed with recent data that have come in a little softer than reports in the first part of the year, to maintain the same relatively cautious tone.