WASHINGTON (MktNews) - In his second take on the future of monetary policy, Federal Reserve Chairman Alan Greenspan provided something for everyone by suggesting further rate cuts are possible but that the U.S. economy is already showing signs of doing better.
Greenspan's prepared text for testimony before the U.S. House of Representatives Committee on Financial Services contained changes on two key pages (page 3 and page 7) and in the summary. It gave the Fed leeway to ease more but added little to the debate about the timing or amount of ease.
Greenspan said economists should continue scrutinizing consumer confidence for clues about the future, but he continued to refer to the sudden slowing in the U.S. economy as an inventory problem.
Greenspan said, "The exceptional degree of slowing so evident toward the end of last year (perhaps in part the consequence of adverse weather) seemed less evident in January and February. Nonetheless, the economy appears to be on a track well below" potential and the "risks continue skewed toward the economy's remaining on a path inconsistent with satisfactory economic performance."
However, Greenspan suggested weakness in home and auto sales has been modest - so consumers "retained enough" confidence.
The new summary says "The Fed has quickened the pace of adjustment of its policy." What is not clear if that will also apply to future rate cuts.