Fed chief signals no rate cuts for now
AuthorAffiliation Staff Reporter of The Wall Street Journal</br></br>The Fed chairman also said for the first time that the explosive rise in employment last month doesn't mean the economy is growing too fast. "It is possible that the February data may have exaggerated the strength of the labor market to some extent," Mr. Greenspan said. "We've not seen a similar degree of strength in other labor-market indicators," such as initial claims for unemployment insurance. The March 8 jobs report jolted the markets, as investors lost hopes for further interest rate cuts and some worried that the Fed might even raise rates.</br></br>Mr. Greenspan said that while some uncertainties remain, "recent data have confirmed the expectation that a good bit of the economic sluggishness of late 1995 was related to inventory adjustment," as companies struggled to pare stockpiles of unsold goods. "The current economic expansion seems to have exhibited staying power," despite the drag from January's severe weather, the brief government shutdown and the recent General Motors Corp. strike, he said.</br></br>He also said high consumer-debt levels and other factors still might be restraining spending. But "the recent data seem to indicate that those restraining influences are not so strong as to seriously jeopardize the continued expansion of the economy," Mr. Greenspan said.</br></br>Economic growth, he said, should continue without fueling inflation. The latest reports of continued low inflation, he said, are "reasonably encouraging," pronouncing himself pleased but "never satisfied."