WASHINGTON (AP) -- Federal Reserve Chairman Alan Greenspan said Wednesday it is still too early to determine how much harm the terrorist attacks will have on the U.S. economy but declared the nation's long-run prospects remain strong.
Greenspan noted that the central bank has already eased credit appreciably, referring to the two half-point interest rate cuts the Fed has made since the Sept. 11 attacks. Those rate cuts brought to nine the total of interest rate reductions made this year by the Fed, driving key rates the Fed controls to the lowest level in nearly 40 years.
Greenspan did not specifically say what the Fed would do, but many private economists are looking for further rate cuts as soon as the Fed's Nov. 6 meeting.
While saying it is still too soon to determine how severe the impacts of the attacks will be on such key sectors as consumer spending, Greenspan said, "The foundations of our free society remain strong and I am confident we will recover and prosper as we have in the past."
Greenspan, testifying to Congress' Joint Economic Committee, did note some hopeful preliminary signs.
"As the initial shock began to wear off, economic activity recovered somewhat from the depressed levels that immediately followed the attacks, though the recovery has been uneven," Greenspan said.
Many economists believe the terrorist attacks have pushed the country into a recession with economic output expected to show declines in both the just-completed third quarter and the current October-December quarter.
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