WASHINGTON, 21 July 2005 — Federal Reserve chairman Alan Greenspan yesterday indicated that further US rate rises are in the offing as he issued a warning over record-high oil prices and “speculative fervor” in the property market.

In midyear testimony to the financial services committee of the House of Representatives, Greenspan said the Fed’s “baseline outlook for the US economy is one of sustained economic growth and contained inflation pressures.” But a slowdown in labor productivity growth could cloud that picture, and energy prices represent another “major uncertainty in the economic outlook”, he said.

Red-hot growth in property purchases meanwhile “seems to have charged some regional markets with speculative fervor”, he added, particularly warning over the increasing use by house buyers of high-risk mortgages.

Greenspan’s periodic appearances before members of Congress are closely followed by financial markets for hints on the Fed’s thinking on US monetary policy. He said that given the favorable outlook overall, the US central bank is likely to continue on a path that has seen it lift interest rates at every meeting since June 2004.

Keeping growth sustained and inflation down “will require the Federal Reserve to continue to remove monetary accommodation”, Greenspan said, using Fed shorthand for its current policy tack. Most economists expect the US central bank to raise the benchmark federal funds rate by another 25 basis points to 3.5 percent when its policy-making committee next meets on Aug. 9.

Greenspan said in addition that the global economy at large needs to be vigilant on various fronts. “As was tragically evidenced again by the bombings in London earlier this month, terrorism and geopolitical risk have become enduring features of the global landscape,” he told the committee.

“Another prominent concern is the growing evidence of anti-globalization sentiment and protectionist initiatives, which, if implemented, would significantly threaten the flexibility and resilience of many economies,” he said.

Greenspan has recently given stern warnings to members of Congress who want to impose trade barriers against China in a bid to exert pressure for the booming country to change policies including its currency regime. Along with US Treasury Secretary John Snow, he has persuaded two prominent senators to shelve a bill that would have imposed a tariff of 27.5 percent on all Chinese imports without a revaluation of the yuan currency.