Nov. 3, 2005
Fed Chairman Greenspan voices optimism economy won't be substantially
harmed by hurricanes
JEANNINE AVERSA
The Associated Press
WASHINGTON - Federal Reserve Chairman Alan Greenspan told
Congress Thursday that fallout from the recent spate of
devastating hurricanes should prove fleeting and that the
economy remains sturdy.
The trio of hurricanes - Katrina, Rita and Wilma - is likely
to "exert a drag" on employment and production in the short term
and may aggravate inflation pressures, Greenspan said in
prepared testimony to Congress' Joint Economic Committee.
"But the economic fundamentals remain firm, and the U.S.
economy appears to retain important forward momentum," the
retiring Fed chairman said in his most extensive remarks to date
on the impact of the storms.
While the Fed chief sounded optimistic about the economy's
prospects, Greenspan, who leaves early next year after 18 years,
made clear that the Fed is keeping a close eye on high energy
prices to make sure they don't spark broader inflation.
Although Greenspan didn't specifically mention the future
course of interest rates, many analysts predict that borrowing
costs will climb in the months ahead as the Fed seeks to combat
inflation.
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