Federal Reserve Chairman Alan Greenspan said today the Fed will raise interest rates if inflation pressures jeopardize economic growth. Speaking before the Senate Banking Committee, Mr. Greenspan said: ``We have yet to see early signs in prices themselves of intensifying pressures.''
Even though the U.S. economy is using its productive resources intensively, inflation has remained idle, he said. Job insecurity and global competition are passing forces that may be holding inflation in check, he said.
``There are early indications that this episode of favorable inflation developments ... may be drawing to a close. ... Clearly, in this environment, the Federal Reserve has had to become especially vigilant to incipient inflation pressures that could ultimately threaten the health of the expansion,'' Mr. Greenspan said.