Posted on: Friday, May 25, 2001

Greenspan hints at recession threat

Advertiser News Services

WASHINGTON — Federal Reserve Chairman Alan Greenspan, warning of "considerable uncertainties" in the economic outlook, said last night that the current period of slow growth has not yet ended. He said business activity could weaken further.

But 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 the Economic Club of New York.

Green-span did not use the word "recession," but his remarks signaled that such an event remains a threat to the economy.

Yields on Treasury securities fell, and stock index futures rose, after his remarks.

The Fed's Open Market Committee has reduced the benchmark overnight bank lending rate five times since the first of the year. At 4 percent, the overnight rate is at its lowest in seven years.

Fed policy-makers are scheduled to meet again June 26-27.