WASHINGTON (AP) — Federal Reserve Chairman Alan Greenspan ignited a rally on Wall Street on Wednesday by signaling that he and his fellow policy-makers will cut short-term interest rates next week.
Greenspan told the Senate Budget Committee that he saw “few signs the financial crisis that started in Asia last year has subsided” and that world policy-makers “have to be especially sensitive to the deepening signs of global distress.”
The central bank chairman refused to say explicitly whether the Federal Open Market Committee, which includes Federal Reserve Board members and regional Federal Reserve Bank presidents, will vote next Tuesday to cut rates for the first time in more than two and a half years.
A reduction in short-term interest rates would cushion the U.S. economy from overseas turmoil by making it cheaper for consumers to finance major purchases and for businesses to expand and invest in new equipment.