Chairman Alan Greenspan on Thursday reinforced market perceptions that interest rates would remain low for some time, warned of the growing federal budget deficit and expressed optimism about an improvement in the sluggish job market.
In a speech to the Securities Industry Association, Greenspan said given companies inability to raise prices "monetary policy is able to be more patient."
On the job market, he said "there have been some signs in recent weeks that the labor markets may be stabilizing." He added that "the odds, however, do increasingly favor a revival in job creation."
Both statements closely mirror what the Fed said two weeks ago when it kept interest rates unchanged at 1%.
Greenspan's comments came after the government earlier Thursday said weekly jobless claims for the week ended Nov. 1 were the lowest in almost three years, and one day ahead of the October jobs report, which is expected to show the economy added jobs for the second-consecutive month.
The Fed chairman's strongest statements were reserved for the ballooning federal budget deficit, which hit a record high in the last fiscal year.
Greenspan said there is "growing longer-term concern in financial markets about our federal budget" and that "the emergence of budget surpluses in the late 1990s eroded the discipline that emerged as a consequence of the earlier fear of ever rising and, hence, potentially destructive deficits."
Those comments added to a minor selloff in the Treasury market.