The Sphinx Speaks

WASHINGTON, D. C.: Did Alan Greenspan budge? The Federal Reserve chairman, who has insisted on keeping the brakes on the economy to ward off inflation, appears to have reversed himself ever so slightly on his refusal to cut interest rates. In his semiannual report on the state of the economy Tuesday, Greenspan sent the Dow into a 50-point plunge when he suggested that no rate cut was in the works. But the Dow gained 30 points Wednesday, after he told the Senate Banking Committee that the opposite could happen. Why? At a time when Greenspan's conservatism conflicts with the White House desire to spur economic growth in an election year, he knows the financial world is hanging on every nuance. "Alan Greenspan is very sensitive to how the financial markets will interpret what he says," reports TIME business writer Bernard Baumohl. "If he feels that the markets interpreted his testimony in an extreme way, then he often wants to come back the following day and reverse course so as to elaborate more carefully. He's trying to make sure that Wall Street understands that he has not committed himself one way or another."