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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (39337)	7/24/2001 12:42:09 PM
From: stockman_scott	Respond to of 65232

'10 keepers from the bargain pile'... moneycentral.msn.com Best Regards, Scott

To: Jim Willie CB who wrote (39337)	7/24/2001 12:43:05 PM
From: stockman_scott	Respond to of 65232

Greenspan Leaves Room for More Rate Cuts Jul 24 12:22pm ET By Barbara Hagenbaugh WASHINGTON (Reuters) - The U.S. economy may not yet be out of the woods, Federal Reserve Chairman Alan Greenspan repeated on Tuesday, again leaving the door ajar for further interest rate cuts by the central bank. But under questioning, the Fed chief said the breach of consumer confidence that he expressed concern about at the beginning of the year had not occurred and that the risks to the economy had "changed" since January. In testimony to the Senate Banking Committee that mirrored formal remarks he gave to a House panel last week, Greenspan noted economic indicators had turned from "persistently negative to more mixed" -- a positive development -- but warned there were still considerable risks to the U.S. economy. "The period of sub-par economic performance, however, is not yet over, and we are not free of the risk that economic weakness will be greater than currently anticipated, and require further policy response," Greenspan reiterated in his prepared remarks. "That weakness could arise from softer demand abroad as well as from domestic developments," he said. "But we need also to be aware that our front-loaded policy actions this year coupled with the tax cuts under way should be increasingly affecting economic activity as the year progresses." Stock markets were little affected by the Fed chief's comments, focusing instead on worries about the prospects for corporate profits. Bonds were slightly softer. MONETARY POLICY EFFECTIVE Despite maintaining his warnings about downside risks to the economy, Greenspan assured senators that the Fed's interest rate actions would aid the economy. "At the end of the day, it does seem to be effective," he said of monetary policy. Some analysts have questioned if rate changes pack the same punch today as they have in the past. Of the international scene, Greenspan said that, despite economic problems in several countries such as Japan and Argentina, there was little chance of a repeat of the type of contagion that wreaked havoc in financial markets in the United States and in other countries during the Asian financial crisis of 1997-1999. "The tinder out there is much less than it was in 1997, there are very few fixed exchange rates problems, the extent to which debt was extended is much less, the reserves are better," Greenspan said. He added that Argentina has significant problems but that authorities there are addressing those difficulties with little chance of contagion. The unexpectedly somber tone of Greenspan's remarks last week solidified expectations the Fed would cut rates by another quarter-percentage point at its next meeting on Aug. 21. And during questioning, Greenspan on Tuesday said he did not see a near-term inflation threat, suggesting the Fed can be comfortable cutting rates without sparking a run-up in prices. "All of our measures suggest fairly firmly that inflation is being contained," he said. The Fed has cut rates six times this year by a total of 2.75 percentage points this year to boost the struggling U.S. economy. Overnight interest rates, which affect borrowing costs for consumers and companies across the economy, now stand at a seven-year low of 3.75 percent.