P.M. BRIEFING : Greenspan Says Fed Remains Committed to Inflation Control

The Federal Reserve Board remains committed to controlling inflation and achieving general price stability, Chairman Alan Greenspan said today.

In remarks before a House Banking subcommittee, Greenspan said the central bank’s actions in recent days were consistent with its long-term policy--that of maintaining a tight-enough hold on credit to control inflation yet steer away from recession.

If the bank’s policy is maintained, as the Fed intends, the goal of general price stability should be reached within a few years, Greenspan said.

But if consumer price inflation continues at June’s steep 0.5% pace, that will be “very troubling,” he said.

Greenspan’s statements came one day after stock prices on Wall Street plummeted 56.44 points after falling as much as 107 points in wild selling--the biggest single-day drop since January.

The market’s sharp drop was attributed in part to confusion over Fed policy that arose after Greenspan said last week that the Federal Reserve will lower interest rates if it thinks it is necessary to offset a credit crunch.