By Evelina M. Tainer, Chief Economist, Econoday
5/25/01

Alan Greenspan addressed the Economic Club of New York on Thursday night delivering a presentation that excited bond markets on Friday morning. He basically acknowledged that economic activity remains sluggish and that the risks of further deterioration are not insignificant. He also indicated that inflation is not an issue these days notwithstanding the higher gas bills consumers are facing. He implied that the likelihood of a Fed rate cut at the June FOMC meeting was high. In an interesting contrast, Fed Governor Laurence Meyer delivered a speech earlier in the day, saying, to the mild panic of bond traders, that he does worry about inflation at this stage. This suggests that not all FOMC members are in agreement these days and that will certainly impact the size of the potential rate cut if it does happen next month.