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Greenspan calls for continued interest rate hikes
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June 21, 2005 BOSTON --
Since U.S. economic growth remains strong,
the Federal Reserve can continue raising
interest rates at a measured pace, Alan Greenspan, Fed chairman, said on
Wednesday in his last testimony to Congress.
However, Mr. Greenspan warned that "significant uncertainties" in energy and
labor costs could dampen the sunny economic outlook. The future behavior of
long-term interest
rates and their subsequent affect on the country's housing market, which he
said is going through a "speculative fervor", could further worsen the
situation.
Greenspan further stated, in writing, that the overall U.S. economy shows
signs of a sustained economic growth with no imminent inflation pressures. The
text that he had prepared for the House of Representatives Financial Services
Committee was released to the media ahead of the testimony.
For a sustained economic growth, he recommended that the Federal Reserve
should continue to remove monetary accommodation. Greenspan, who is due to
stand down by the end of January, noted that no matter how positive the
scenario seems right now, every aspect requires careful scrutiny.
- By
Amrit Hallan for CMR Loan news.
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