Greenspan Says Technology Holding Down Inflation
(Update1)
By Michael McKee
Washington, Oct. 19 (Bloomberg) -- There is little evidence a surge in high
technology investment that's helped hold down inflation is ending, and so far, few
signs higher oil prices are a threat, Federal Reserve Chairman Alan Greenspan
said.
Business investment in computers and other high-tech equipment, over the past
five years particularly, has helped hold down inflation by ``significantly'' boosting
worker productivity, Greenspan told a Cato Institute conference on monetary
policy.
``As best we can judge, credible evidence that the rate of structural productivity
growth has stopped increasing is still lacking,'' Greenspan said.
The economy's reduced dependence on oil, and the oil industry's
technology-aided ability to increase production, has also helped keep inflation in
check and the economy on track, even as oil prices have risen, he said.
``To date, the spillover from the surge in oil prices has been modest,'' Greenspan
said.
The effect on inflation expectations ``has been nil,'' and though Americans have
had to pay more for gasoline and heating oil, ``the growth of consumer spending
has remained firm,'' he said.
While he said policy-makers will need to be ``alert'' for energy-driven risks to what
is now the longest U.S. economic expansion ever, Greenspan's remarks suggest
he sees little reason for the central bank to change the level of interest rates
anytime soon.
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