Press Release

Immediate Release!

Short Term Pain: Greenspan

WASHINGTON (Reuters) September 20, 2001- Federal Reserve Chairman Alan Greenspan told Congress Thursday that last week's devastating attacks will damage the economy in the short-term by making Americans fearful of the future but won't dampen bright long-term prospects.

"The shock of September 11, by markedly raising the degree of uncertainty about the future, has the potential to result, for a time, in pronounced disengagement from future commitments," the Fed chief said in remarks prepared for delivery to the Senate Banking Committee. This pull-back from economic commitments will slow the economy's growth, he said.

"Indeed, much economic activity ground to a halt last week," Greenspan said. "But the foundations of our free society remain sound, and I am confident that we will recover and prosper as we have in the past."

The U.S. central bank cut interest rates Monday - six days after the attacks in its eighth cut so far this year -- and has injected huge amounts of cash into the banking system to ensure ample funds for the economy and the markets after the attacks. Greenspan's testimony offered no hints of whether the Fed was considering further rate cuts, although analysts expect more this year