Federal Reserve Chairman Alan Greenspan approves of President Bush’s idea of an "ownership society", offering support for Bush’s plan for reforming Social Security. In his second day of congressional testimony, Greenspan uttered the belief that the creation of private accounts could bolster the sentiment of wealth among less wealthy Americans.

Greenspan admitted that private accounts would not drastically improve the situation in the Social Security but they could help to create "a sense of ownership" among American people.

"These accounts, properly constructed and managed, will create … a sense of increased wealth on the part of middle- and lower-income classes of this society, who have had to struggle with very little capital," Greenspan said.

"While they do have a claim against the Social Security system … as best I can judge, they don’t feel it is personal wealth the way they would with personal accounts," he added.

Federal Reserve Chairman Alan Greenspan said in his Congressional testimony on Wednesday that the US economy continues to rebound and reiterated that the Fed funds rate is still below neutral even after the recent hikes. The Fed’s stance on the rate gave a short-term boost to the dollar.

The market was alerted by the fact that Greenspan did not use the often-mentioned word "measured" with reference to the projected rate hikes, suggesting that the increases can speed up in the near future.
The Fed boss said the following: "The cumulative removal of policy accommodation to date has significantly raised measures of the real federal funds rate, but by most measures, it remains fairly low."

The neutral range, forecast by economists, hovers between 3% and 5%.

On the other hand, Fed chairman seems to see the inflation to be tame at the moment. In his speech he named inflation expectations to be "well anchored."

"Despite the combination of somewhat slower growth of productivity in recent quarters, higher energy prices, and a decline in the exchange rate for the dollar, core measures of consumer prices have registered only modest increases," Greenspan said.