By Evelina M. Tainer, Chief Economist, Econoday
3/2/01

Fed Chairman Alan Greenspan testified twice this week, once before the House Financial Services Committee and once before the House Budget Committee. In both cases, the testimony was not all that different from that delivered earlier (late January and mid February). His remarks disappointed the market because he didn't allude to an imminent rate cut. On Friday, Greenspan admitted that he was intentionally ambiguous on Tuesday about the timing of the next rate cut. The negative reaction was partly a result of market exuberance on Monday when former Federal Reserve Governor Wayne Angell, now chief economist for Bear Stearns, predicted that the Fed would cut rates during the week. The Angell forecast led to a sharp rally in stocks, which then plunged after the Greenspan testimony. Negative sentiment was a key feature of the market this week since the economy doesn't appear to be weak enough to justify a rate cut before the March 20 FOMC meeting.