Greenspan Speaks: Still-Weak Economy Brightened a Little in January; Tax Cuts Highlight Q&A

Updated from 10:13 a.m. EST

In this morning's semiannual testimony to the Senate Banking Committee, Federal Reserve chairman Alan Greenspan emphasized the ongoing weakness in the economy, indicating the Fed is likely to continue cutting rates.

He said, however, that the economic weakness didn't seem to have been as bad in January as it was in December. The markets have put together a bit of a rally in response, but it's no barnburner.

Greenspan, in the testimony formerly known as Humphrey-Hawkins but now simply referred to as the "monetary policy report to Congress," made it clear that the Fed views recession as a very real possibility, one that can occur too quickly for monetary policy to anticipate. As is his nature, he balances out what he sees as positive developments with negative aspects of the economy, but he makes explicit that the Fed is focused on combating more economic weakness. ...