Fed Says Economy Is Slowing

U.S. economic growth is “clearly slowing” from its pace earlier in the year, Federal Reserve Board Chairman Alan Greenspan said Thursday.

Greenspan said it’s “still unclear” as to how much of a slowdown is in progress.

At the same time, the Fed chairman said there are signs that product and labor markets are approaching capacity limits. The Fed is examining these signs for “evidences of pressures” that inflation is about to accelerate.

Greenspan’s comments, at a hearing by the Senate Banking Committee, come as the Fed’s Open Market Committee prepares to meet Tuesday to set interest rate policy for the weeks ahead.

Economists are divided over whether the committee will vote to raise key lending rates next week or wait until after the November Congressional elections. In previous moves this year, the Fed pushed the federal funds rate on loans among banks to 4.75% from 3%, and the discount rate on direct loans to banks to 4% from 3%.