Greenspan: More Interest Rate Hikes Coming

The head of the U.S. central bank told a Congressional committee Wednesday to expect more interest rate hikes.

Alan Greenspan, chairman of the Federal Reserve, said numerous indicators point to continued healthy growth in the U.S. economy.

Specifically he cited household spending, business investment and non-business construction as growing. And if the futures markets are correct, the recent run-up in energy prices is set to end with prices falling to a level that will stimulate more spending, Greenspan said.

Our baseline outlook for the U.S. economy is one of sustained economic growth and contained inflation pressures. In our view, realizing this outcome will require the Federal Reserve to continue to raise interest rates.

Greenspan also said the fall in long-term real interest rates results from an excess of global savings over investment.

He cited approvingly better capital investment climates in Japan and the United States, as opposed to Europe.

Greenspan urged Congress to continue 25 years of bipartisan effort aimed at reducing unnecessary regulation and promoting the openness of our market economy. Going forward, policymakers will need to be vigilant to preserve this flexibility, which has contributed so constructively to our economic performance in recent years.