MercoPress. South Atlantic News Agency

Greenspan cautions about recovery.

The Chairman of the Federal Reserve, Alan Greenspan said that there are signs of recovery in the United States economy but warned that it would be a moderate come back, at least at the beginning.

Addressing the Financial Services Committee of the House of Representatives on the state of the economy, Mr. Greenspan said that "increasing signs have emerged that some of the forces that have been restraining the economy over the past year are starting to diminish" and that economic activity is starting to consolidate.

Nevertheless Mr. Greenspan cautioned about the cross currents that could moderate the speed of recovery mentioning the burden of consumer debt, unemployment and a drop in the value of stock.

Greenspan words were interpreted as meaning that for the moment the Federal Reserve will maintain interest rates levels unchanged.

In the past year the Fed cut interest rates eleven times to 1,75% in an attempt to stimulate consumption and thrust the US economy that has been in recession officially since March 2001.

At the beginning of 2001 interest rates were at their highest level since 1991, and now are at the lowest ever since 1961.

The Federal Reserve will be meeting next March 19th. to decide on interest rates but given the current situation and with inflation under control analysts expect no changes until perception of recovery is solid.

The Fed estimates the US economy will grow between 2,5 and 3% this year with unemployment reaching 6,5%.