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Federal Reserve Chairman Alan Greenspan said Thursday (June 9) that the economy seems to be on a “reasonably firm footing,” with inflation under control, according to the Associated Press.
In his most extensive remarks on the state of the economy since February, Greenspan said that a recent uptick in economic indicators showed the soft readings of the early spring were not signaling a more serious slowdown in the pace of activity.
Greenspan’s generally upbeat assessment of the economy provided support for the view that the Fed, which has raised interest rates eight times over the past year, planned to continue nudging rates higher at a gradual pace.
“The U.S. economy seems to be on a reasonably firm footing, and underlying inflation remains contained,” Greenspan said in remarks to the congressional Joint Economic Committee.
Greenspan said because of this the Fed was able at its last meeting to repeat a pledge it has been making for the past year that it will be able to move rates higher “at a pace that is likely to be measured.”
Fed policy-makers next meet on June 29-30 and it is widely expected that the Fed will raise a key short-term rate, the federal funds rate, by another quarter-point to 3.25% at that time.
Many analysts believe that the Fed will keep raising rates by a quarter-point at later meetings this year, but others think the Fed may decide to pause in the rate hikes later in the summer or early fall.
Greenspan, however, gave no hint that the Fed is ready to pause in its rate hike campaign.
He said that the economy has “alternately paused and quickened” this year, fluctuations that he blamed in large part on the rise and fall in energy prices.