WASHINGTON -- Federal Reserve Chairman Alan Greenspan, in a sober assessment of economic prospects, says the worst of the slowdown that has plagued the country for nearly a year may not be over.
But he signaled that the central bank, which has already cut interest rates five times since January, stands ready to do more in an effort to prevent a recession.
"The period of sub-par economic growth is not yet over, and we are not free of the risk that economic weakness will be greater than currently anticipated, requiring further policy responses," Greenspan said in a dinner speech Thursday night in New York City.
Private analysts viewed the remarks as a clear signal that further rate relief from the Fed was on the way. The central bank has already cut rates by 2.5 percentage points since early January, its most aggressive credit easing since 1982 when the country was struggling to emerge from the worst recession of the post-World War II period.
Many private economists predicted that the Fed would cut rates by another half-point when policy-makers next meet on June 26-27.
"Mr. Greenspan is telling us that his job is not done yet," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis. "Right now, it's a high wire act. We are straddling between a soft landing and a recession."
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