USA: FEDERAL RESERVE CHAIRMAN ALAN GREENSPAN WARNS THAT THE U.S. ECONOMY IS STILL AT RISK OF WEAKENING MORE THAN ANTICIPATED

Record ID: 208416

  • Title: USA: FEDERAL RESERVE CHAIRMAN ALAN GREENSPAN WARNS THAT THE U.S. ECONOMY IS STILL AT RISK OF WEAKENING MORE THAN ANTICIPATED
  • Date: 24th May 2001
  • Summary: NEW YORK, NEW YORK, USA (MAY 24, 2001) (REUTERS) 1. LV DINNER BANQUET OF ECONOMIC CLUB OF NEW YORK 0.14 2. SV (English) US FEDERAL RESERVE CHAIRMAN ALAN GREENSPAN SAYING "This period of sub-par economic growth is not yet over, and we are not free of the risk that economic weakness will be greater than currently anticipated." 0.34 3. LV BANQUET 0.41 4. SV (English) GREENSPAN SAYING "But we also need to be aware that our front-loaded policy actions this year should be providing substantial support for a strengthening of economic activity later this year." 0.58 5. LV BANQUET 1.01 6. SV (English) GREENSPAN SAYING "Were we to lower overnight rates in advance of an expected break in asset prices, we would, presumably, only exacerbate the economic and financial imbalances. Our only realistic alternative is to lean against the economic pressures that many accompany a rise in asset prices, bubble or not, and address forcefully the consequences of a sharp deflation of asset prices." 1.33 7. SLV AUDIENCE 1.41 Initials Script is copyright Reuters Limited. All rights reserved
  • Embargoed: 8th June 2001 13:00
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  • Location: NEW YORK, NEW YORK, UNITED STATES
  • City:
  • Country: USA
  • Reuters ID: LVADR2S6ZAR8JD3I1VU3AL2J9XD5
  • Story Text: Federal Reserve Chairman Alan Greenspan warned that
    the U.S. economy is still at risk of weakening more than
    anticipated.



    At a dinner banquet held by the Economic Club of New
    York, Greenspan added on Thursday (May 24) that the aggressive
    interest rate cuts the Fed has already made this year should
    offer the economy "substantial" support by year end.

    Greenspan's speech came nine days after the Fed cut
    interest rates by an aggressive half-percentage point for the
    fifth time this year to boost the shaky U.S. economy and was
    his first in-depth address on the economy in three months.

    The Fed chief's words led some economists to think this
    cycle of aggressive interest rate cuts may be drawing to a
    close. Fed policymakers next gather on June 26-27.

    Greenspan stressed that inflation was under control and
    that he expected ti to remain so in the near future,
    suggesting that the Fed has room to lower rates without
    risking a flare-up in price pressures.

    He cautioned that consumer spending, while currently soft
    but not "unduly" so, could weaken over the next few quarters
    because of declines in personal wealth. Fed officials keep a
    sharp eye on consumer spending because it accounts for
    two-thirds of U.S. economic activity.

    He repeated his optimism about the future course of
    technology-driven worker productivity gains, saying corporate
    desire to boost profits has not weakened.

    Regarding stock prices, Greenspan said the Fed should not
    move to prevent declines in asset markets, but that its job
    was instead to respond to the economic consequences of market
    swings.

    "Our only realistic alternative is to lean against the
    economic pressures that may accompany a rise in asset prices,
    bubble or not, and address forcefully the consequences of a
    sharp deflation of asset prices," he told the gathered
    economists.


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