Federal Reserve Chairman Alan Greenspan refused to rule out another interest rate increase but told a House panel he does not think rates are headed back to the 20 percent level of a decade ago.
Greenspan, who has engaged in running rhetorical warfare with President Bush over how high interest rates should go to fight inflation, told a House banking subcommittee Wednesday that the nation's central bank intends to continue to use interest rates as its chief inflation fighter.Bush told reporters Tuesday he thinks interest rates may be high enough and said further increases could force the economy into a recession.
"I don't want to see any actions that are going to kill off the growth in our economy," Bush said.
Greenspan, however, told lawmakers the Fed knows interest rate hikes create negative ripples in the economy and the agency's goal is to keep both long-term and short-term interest rates as low as possible.
"The way to get that is to get a stable economy and the way to get a stable economy is to make sure that disruptive inflationary pressures do not take over," Greenspan said, repeating his position that inflation is worse for the economy in the long run than high interest rates.
Greenspan argued that had the Fed not starting boosting interest rates last year to try to put a damper on inflation, things might be worse today.
"Actions we have taken to date probably made interest rates lower than they would otherwise have been," he said.