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Tuesday, 25 July, 2000, 21:43 GMT 22:43 UK
Greenspan undecided on rates
Alan Greenspan
Mr Greenspan weighs his interest rate options
It is unclear whether US interest rates need to rise more to slow the booming economy, Federal Reserve chairman Alan Greenspan indicated on Tuesday.

Speaking after his testimony to the US Congress, he said that the recent rate rises have yet to have any impact on the economy.

"Interest rates have got to have had some effect, but there is still a significant amount of the recent interest rate changes which clearly have not yet impacted the economy," Mr Greenspan said.

"We will not know for a while. We will know more, I presume, by the time of our next meeting and at that particular point we will make a judgement as to whether or not further action - or no action - is the most appropriate policy," he added.

The Federal Reserve next meets to decide whether to raise interest rates on 22 August. It has raised interest rates six times in the past year, in an attempt to slow the US economy.

Reassurance

Mr Greenspan said the economy has been moving towards more balanced growth in the past few months.

"We seem to have been moving closer to balance in the last two or three months but we do not as yet have adequate data to suggest how much closure has occured, and will not have for a while," he said.

His comments have reassured investors who feared another interest rate rise was imminent.

His speech to Congress was largely a repeat of last week's testimony, where he cheered investors by pointing to signs that the US economy was slowing.

"Greenspan was no surprise," said Alfred Goldman, technical analyst at A.G. Edwards & Sons in St. Louis. "There is some concern that the economy will slow down too much and that corporate earnings will be impacted."

Swinging economy

Mr Greenspan's comments came as a slew of data on Tuesday confirmed that the US boom was still in full swing.

Sales of existing homes rose in June to their highest level since August of last year despite higher mortgage rates, an industry trade group said.

Consumer confidence rose in July as Americans became even more optimistic about their chances for finding jobs and overall prosperity, the Conference Board said on Tuesday.

The Consumer Confidence Index rose to 141.7 in July from 139.2 in June.

"Consumers are not only optimistic about current conditions but their expectations for the next six months signal continued low unemployment and minimal inflationary pressures," Lynn Franco, director of the Conference Board's Consumer Research Centre, said.

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See also:

20 Jul 00 | Business
Greenspan sees signs of slowdown
04 Jan 00 | Business Basics
Alan Greenspan, scourge of the markets
16 May 00 | Business
US interest rates up 0.5%
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