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To: Sonny McWilliams who wrote (26934)	5/25/2001 7:40:57 AM
From: William Hunt	Read Replies (1) \| Respond to of 27012

Greenspan: Economic Weakness Has Not Yet Ended Thursday, May 24, 2001 Email this Article WASHINGTON — Federal Reserve Chairman Alan Greenspan, warning of "considerable uncertainties" in the economic outlook, said Thursday night that the current period of slow growth has not yet ended. He said there was still a threat that business activity could weaken further. While delivering a sober assessment of the dangers still facing the economy, Greenspan signaled that an absence of inflationary pressures left the central bank with plenty of room to cut interest rates further if needed to guarantee that a sustained rebound will occur. "The period of sub-par economic growth is not yet over, and we are not free of the risk that economic weakness will be greater than currently anticipated, requiring further policy response," Greenspan said in a dinner speech to Economic Club of New York. Greenspan did not use the word "recession," but his prepared remarks clearly signaled that a possible recession remained a threat to the economy. The Fed has already cut interest rates five times this year in the most aggressive easing move ever carried out during Greenspan's nearly 14 years as head of the central bank. Those moves have reduced the federal funds rate, the interest that banks charge each other, by 2.5 percentage points, driving borrowing costs for millions of American consumers and businesses to the lowest level in seven years. Noting these moves, Greenspan said, "Our front-loaded policy actions this year should be providing substantial support for a strengthening of economic activity later this year." But Greenspan indicated that concerns about greater-than-expected weakness were likely to persist for "several quarters." Signaling that the Fed was prepared to cut rates further, Greenspan said that he could detect no signs that inflation was threatening to get out of control. He said the economic slowdown that began last summer was helping to hold down prices. "The lack of pricing power reported overwhelmingly by business people underscores an absence of inflationary zest," Greenspan said. He predicted that inflation pressures should lessen further as energy prices retreat and the rising unemployment rate takes pressure off previously tight labor markets.