Fed chairman on oil prices and economic growth

The Fed chairman sees moderate growth for the US economy in the face of high oil prices.

Greenspan said Fed research found that the rise in oil prices since 2003 to above $60 a barrel is likely to shave about three-quarters of a percentage point from the U.S. gross domestic product this year. Rising energy costs sapped growth by a half-percentage point in 2004, he said in written responses to questions from Congressional Joint Economic Committee Chairman Jim Saxton, a New Jersey Republican.

Greenspan is sanguine about the message being sent by the yield curve.

The central bank head also said flat long-term interest rates, despite the Fed's short-term rate hikes, should not be interpreted as a clear sign of economic faltering. "A sharp flattening of the yield curve is not a foolproof indicator of economic weakness," he said. Greenspan said most statistical models that look at the yield curve -- different interest rates along the spectrum of Treasury debt maturities -- to forecast economic trends project moderate growth.

Respondents to a survey by the National Association for Business Economics (NABE) also seem upbeat about the economy. "The NABE respondents see continued solid growth in the economy," said Gene Huang, Chief Economist, FedEx Corporation.