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Greenspan 'Sanguine,' Sources Say

Conference: Officials at Australia meeting say Greenspan is satisfied there's little reason for concern about inflation.

June 03, 1996|From Reuters

SYDNEY, Australia — U.S. Federal Reserve Chairman Alan Greenspan indicated Sunday that he remains satisfied that the United States' economy is not growing strongly enough to cause concern about inflation, according to sources at an international monetary conference in Australia.

One of the sources, who attended a Greenspan briefing by video link with Washington, said he thought the Fed chairman sounded "rather sanguine" about inflation in his private talk to commercial and central bankers attending the conference.

Greenspan did not take part in a news conference after the closed-door session because of the late hour in Washington.

A senior delegate to the conference said Greenspan was asked about the risk of a rise in interest rates as a result of the strong U.S. economy but that Greenspan did not reply directly.

The Fed chairman, who is known for the obscurity of his official statements, "used Greenspan language" that left delegates none the wiser, Industrial Bank of Japan President Yoh Kurosawa told reporters.

"His answer, as usual, was very unclear," Kurosawa said.

Financial markets in the United States have been positioning themselves as if there might be an increase in interest rates.

There was a sell-off in U.S. Treasuries on Friday after a former Fed governor warned that the Federal Reserve Board's policy setting Federal Open Market Committee could raise interest rates in July.

The closed-door meetings during the three-day annual conference of central bankers and finance officials are used as an opportunity to discuss international banking industry matters informally.

Sources said the bankers concentrated their discussions on issues such as sovereign debt problems in Latin America and Russia, the independence of European central banks and proposed closer ties among central banks in the Asia-Pacific region.

The sources said it was agreed that debtor countries need to follow responsible policies because they can not expect bailouts, such as the U.S.-led loan-guarantee program for Mexico, to be routine.

After the meeting of central bankers from some of the world's richest nations, the governors representing the Bank of England and Bank of France adopted an upbeat tone, although they tempered their predictions of stronger economic growth with expressions of long-term concern about inflation.

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