No Surpise. Greenspan Reiterates Rate Rise

ByJohn S. McClenahen Without saying specifically when, Federal Reserve Board Chairman Alan Greenspan told Congress' Joint Economic Committee on April 21 that "the federal funds rate must rise at some point to prevent pressures on price inflation from eventually emerging." The target federal funds rate, the interest rate banks charge each other on overnight loans, has been at 1% since last June. Some economists see it rising to 1.75% by yearend, with the first increase of 25 basis points coming at the Federal Open Market Committee's Aug. 10 meeting. Assessing the U.S. economy overall, Greenspan told the committee that "the prospects for sustaining solid economic growth in the period ahead are good" adding that "the caution among business executives that had previously led them to limit their capital expenditures appears to be giving way to a growing confidence in the durability of the expansion."