Greenspan Dilutes Cheer With Warning

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Despite a range of hurdles, six interest rate cuts, along with a tax cut and cheaper energy, should help the U.S. economy begin to rebound, Federal Reserve Chairman Alan Greenspan told a congressional panel Wednesday.

According to wire service reports, Greenspan told the House Financial Services Committee that the rate cuts so far this year coupled with tax cuts under way should be increasingly affecting economic activity.

However, he warned that the U.S. is not free of the risk that economic weakness will be greater than currently anticipated and require further policy response, Reuters said.

The Associated Press said economists viewed Greenspan's remarks as sending a strong signal that another interest rate cut could come as soon as the Fed's next meeting on Aug. 21.

Before Greenspan testified, the government reported that the consumer price index, a closely watched inflation gauge, rose 0.2% in June, while the costs of gasoline and other energy products retreated.

However, AP said electricity prices posted a record rise.

Also, housing construction posted a strong 3% increase.

According to AP, economists say once companies work off excess inventories, they will be in a position to rev up production, which would bode well for a rebound in economic growth.