Fed's Greenspan May Signal End to Interest-Rate Cuts (Update1)
By Carlos Torres
Washington, Jan. 11 (Bloomberg) -- Federal Reserve Chairman Alan Greenspan will probably say in a speech today that the worst of the 10-month U.S. recession has passed and he may suggest additional interest-rate reductions aren't assured, analysts said.
Seven other Fed officials have said this week that a recovery from the recession that started last March is likely by midyear. That is the message Greenspan may echo when he offers his views on the economy at a conference in San Francisco.
It looks like policy makers ``are willing to entertain the idea the economy is close to a bottom,'' said Jade Zelnick, chief economist at Greenwich Capital Markets Inc. in Greenwich, Connecticut. That suggests that after 11 rate cuts in the past 12 months, ``they are just going to sit tight for a while and watch the incoming data,'' she said.
Central bankers have said this week that reducing the benchmark overnight bank lending rate to a 40-year low of 1.75 percent may be enough to turn the economy around and bring an end to the first recession in a decade.
``The Fed has to remain flexible,'' said Philadelphia Fed Bank President Anthony Santomero in an interview yesterday. ``I think we want to look closely and see exactly where the economy is going and not prejudge what is necessary.''
Recent statistics show increased consumer confidence, a rise in home sales, and a pickup in orders to manufacturing and service companies. While unemployment climbed last month to a 6 1/2-year high of 5.8 percent, the economy lost fewer jobs in December than any time in four months.
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