Greenspan told the Senate and House Banking committees that “recent experience does seem to suggest that the economy has become less inflation-prone than in the past, so that the chances of an inflationary breakout arguably are, at least for now, less than they would have been under similar conditions in earlier [business] cycles.”

Until recently, Greenspan and other Fed officials had worried that most of the unusually low level of inflation stemmed from temporary factors, such as falling oil and commodity prices, a strong U.S. dollar, rapidly declining computer prices and recessions in Asia. Now, Greenspan and some of his colleagues have become more confident the economy has changed in more long-lasting ways that make a sudden, strong surge in inflation unlikely.

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