(21 Jan 1997) English/Nat
U-S financial markets surged into record territory again Tuesday, despite concerns over comments from Federal Reserve Chairman Alan Greenspan.
He was on Capitol Hill to give his first economic report to Congress in six months.
Investors were worried that Greenspan was ready to warn of action by "the Fed" to slow the economy by raising interest rates.
Greenspan made it clear that the central bank is on alert, but his remarks failed to aggravate fears of an interest rate hike.
The news was well received in the markets and at the White House.
Greenspan's report to Congress on the U-S economy's performance in 1996 was positive.
The powerful Federal Reserve chairman gave a fairly upbeat assessment of recent trends, despite lingering concerns over the impact of inflation on economic growth.
SOUNDBITE:
"I think it's certainly fair to say that the overall performance of the American economy has continued to surpass most forecasters expectations. The current cyclical upswing is now approaching six years in duration and the economy has retained considerable vigour with few signs of imbalances and inflationary tensions that have disrupted past expansions."
SUPER CAPTION: Alan Greenspan, Chairman, Federal Reserve Bank.
And despite growing concerns for the impact on America's low jobless rate, and the impact on wage demands, Greenspan said inflation rates appear to be in good shape for now.
SOUNDBITE:
"But in contrast to that earlier period, we have not experienced a broad increase in inflation. In fact, by some important measures of price trends, inflation actually slowed a bit last year."
SUPER CAPTION: Alan Greenspan, Chairman, Federal Reserve Bank
Greenspan said that long term trends are also good although some economists have taken his comments as a clear signal that the Federal Reserve's next move will be to tighten interest rates.
SOUNDBITE:
"And I see no reason why if we can eliminate the long-term inflation that was embodied in the budget beyond the year 2002 that we can find ourselves with fairly dramatic declines, further declines in long-term rates from current level in the not too distant future."
SUPER CAPTION: Alan Greenspan, Chairman, Federal Reserve Bank.
Republican leaders on the Banking panel gave another hard pitch at efforts to balance the federal budget.
Greenspan wasn't shy about his own concerns over the demands a balanced budget amendment to the U-S constitution would place on the president and lawmakers.
SOUNDBITE:
"I have not been sympathetic to the specific details of most balance budget amendments largely because I think they are very difficult to enforce and I'm terribly much concerned about the issue of employing detailed economic policy within the constitution itself."
SUPER CAPTION: Alan Greenspan, Chairman, Federal Reserve Bank.
But there is already political momentum on Capital Hill and in the White House for a balanced budget.
And President Clinton challenged Republicans Tuesday to meet him halfway, after months of bickering over the need for a workable balanced budget plan.
Clinton says he's determined to follow up on his inaugural call for bipartisanship by cutting a deal with Republicans to balance the budget.
SOUNDBITE:
"To that end on February 6th I will submit a balanced budget. As I said yesterday, we have to do what I will do - maintain our commitment to a balanced budget and the balance of our values."
SUPER CAPTION: Bill Clinton, US President
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