GREENSPAN hints of another rate cut if flagging economy doesn't improve soon
Tuesday, July 24th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ Federal Reserve Chairman Alan Greenspan says another decrease in interest rates may be on the horizon if the flagging economy doesn't improve.
Greenspan's twice-yearly economic report card, delivered to the Senate Banking Committee Tuesday, tracked the written report he presented to the House Financial Services Committee last week.
``The period of subpar economic performance ... is not yet over, and we are not free of the risk that economic weakness will be greater than currently anticipated and require further policy response,'' Greenspan said in his prepared testimony.
In an effort to avert the first recession in 11 years, the Federal Reserve has cut interest rates six times this year, totaling 2.75 percentage points. It has been the most aggressive credit-easing campaign in nearly two decades.
The Fed meets next on Aug. 21 and many economists believe policy-makers will cut rates for a seventh time, probably by a more conservative quarter-point.
In his testimony, Greenspan again expressed hope that the Fed's actions, falling energy costs and tax-rebate checks will bolster an economy stuck in low gear for a year. The first wave of nearly 8 million tax rebates were mailed out last Friday _
The central bank chief's words are typically awaited with anxiety and anticipation. Decisions that he and the Fed make in terms of directing monetary policy substantially affect the lives of people, from would-be home-buyers and investors to people seeking jobs or trying to borrow for a college education.
Greenspan attributed much of the economy's weakness to businesses sharply cutting production as well as spending on computers, factories and other capital goods in response to sagging demand.