Greenspan: US economic growth on track

Greenspan: US economic growth on track

US Federal Reserve (FED) Chairman Alan Greenspan indicated that inflation is in check and that the US economy is growing at a reasonably good pace. Greenspan said that the US economic expansion had firmed, overall inflation had subsided and core inflation had remained low in the last seven months following his report to Congress in February. The FED chief projects economic growth of between 3.75-4.0% for 2005, with core inflation holding at between 1.5-1.75%. The unemployment rate is expected to decrease slightly, to around 5.25%, by the fourth quarter. Unemployment rate is currently 5.4%. For 2006, the FED projects growth around of 3.5%, with no significant increase in inflation or unemployment. The FED chairman gave no clear indication about future interest rate directions; however, he added that the base rate, now at 2.5%, remains fairly low by most measures. This suggests gradual rate increases are likely to continue.