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Credit First Service Union Fed chairman Alan Greenspan told the Senate banking committee Wednesday that even with higher oil prices and rising interest rates that the US economy is doing fine.If you would like to receive late breaking business news covered by AXcess News then you need to subscribe. By joining, you can stay ahead of the pack and receive the latest news in your email in-box first.
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Mortgage defaults and other credit issues have dulled the European economy's strength and snapped five straight days of gains against the greenback.
Card Credit Discover Service Feb 16, 2005 (AXcess News) New York - Fed chairman Alan Greenspan told the Senate banking committee Wednesday that even with higher oil prices and rising interest rates that the US economy is doing fine.
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Credit Public Service Union "All told, the economy seemed to have entered 2005 expanding at a reasonably good pace, with inflation and inflationary expectations reasonably well anchored," he said.
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Card Credit Processing Service Though Greenspan had no negative view towards the US economy, he was at loss as to why long-term interest rates have remained low. Signaling concern to bond traders that the market could be over-stated. "For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum," Greenspan told the Senate Banking Committee.
Center Credit Service Union Greenspan stated that short-term interest rates would continue to rise. Todate, the US central bank has raised Fed fund rates, the rate charged banks for overnight loans, six times to its current 2.5% level. Greenspan said that despite the rate hikes US rates in general remained "fairly low."
Card Credit Service Wireless The Fed chairmand did deliver his strongest warning yet, aimed at the Bush administration, saying that the US needed to reduce its massive trade imbalance and budget deficit.AdvertisementWhile he did believe that the US economy was running smoothly with growth near three percent and inflationary expectations "well anchored." The federal reserve will most likely continue raising interest rates throughout the year as high as 3 to 4 percent.
Credit Security Service Union Greenspan's largest worry remained the huge debt load the United States carried, warning that it was "imparative" that the US boost its savings rate to lower the account deficit, now running near six percent of the gross domestic product (GDP) as well as curbing the budget deficit. When asked pointedly about the budget he said that the Bush administration had two choices. Cut the budget or raise taxes.
Credit Report Service "We have to get the deficit down, before we run into really serious problems, beyond 2008," Mr Greenspan said.Greenspan also showed support for President Bush's social security reform, though he did put the question to Senate banking committee members that the government would need to inject cash into the program if it were adopted and that is where he said "borrow or increase taxes." But even the administration concedes that the transition will require $754 billion of new borrowing in the next 10 years, with even more thereafter if Bush's partial-privatization plan for the US retirement program were enacted by Congress.
Blogspot Com Christian The 10-year Treasury Note declined in value at the close in New York trading with a yield of 4.158 percent, up 0.06%. Despite Greenspan's optimism over the US economy the Dow Jones Index closed down 2.44 percent at 10,834.88.
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