Greenspan rejects inflation fears

Inflation is not likely to be a serious concern and the Federal Reserve can stick to its plan to introduce measured increases in the benchmark interest rate, Federal Reserve chair-man Alan Greenspan said in a statement yesterday.

“Our best judgment is that the economy is growing in solid fashion,” Mr Greenspan said to the Senate Banking Committee during a hearing to confirm him for a fifth term as Fed chairman.

“Inflationary pressures are not likely to be a serious concern in the period ahead, he added.

Greenspan’s comments and yesterday’s Labour Department report, which shows a 0.2% increase in the core consumer price index for May gave some reassurance to investors that the Federal Reserve doesn’t have to speed up rate increases.

US Treasuries rose after losing ground last week, when Greenspan and other Fed officials suggested that they might accelerate rate increases if inflation exceeded expectations.