The head of the U.S. central bank, Alan Greenspan, says the U.S. economy is doing fine even with rising interest rates and oil prices higher than they were 18 months ago. The Federal Reserve Chaiman addressed the Senate Banking Committee.
Mr. Greenspan was generally upbeat about the condition of the U.S. economy. Inflation, he said, is under control and growth, which resumed in 2002 and gained strength over the next two years, is continuing.
"All told, the economy seemed to have entered 2005 expanding at a reasonably good pace, with inflation and inflationary expectations reasonably well anchored," he said.
The U.S. economy probably grew at a four percent rate in 2004. Experts are predicting just a modest slowdown in growth this year. By contrast, the world's other big economic regions grew less robustly, with Japan's economy up only two percent and Europe less.
Mr. Greenspan also indicated overnight interest rates, which the central bank raised six times since last June, will continue to rise. He said the increases have not hurt the economy.
"As you know, the response in the marketplace has not been one of significantly rising long-term rates, difficulties in the housing market, and difficulties like we had encountered in the past during previous increases in rates," Mr. Greenspan said.
Mr. Greenspan, now in his final 12 months of what is already an 18-year tenure as central bank chief, said it is essential that Americans save more and that government begins to tackle the bulging budget deficit.