Firmly Unsure

NEW YORK CITY: Industry analysts and journalists alike came up with very different interpretations of Alan Greenspan's Thursday speech on the state of the economy. "Greenspan Hints Fed Will Let Rates Stand" was the headline in Friday's Washington Post, while USA Today preferred "Greenspan Hints at New Rate Increase." The New York Times went with a literal "Greenspan Defends Fed's Rate Policy." Meanwhile, bond traders hit the phones with sell orders, betting that a May 20th rise in interest rates was in the cards. Friday, by the time stock markets opened, investors were following the Post's view that Greenspan's remarks mean a rise is now less likely. The Dow quickly ran up 57 points after the opening bell, then fell 100 points, then rose again to finish the day up 32.91 at 7,169.53. The best interpretation, says TIME's Adam Zagorin, lies somewhere in between the headlines. "What Greenspan said is while he doesn't seem to think a rate increase is necessary, he wouldn't hesitate to push for one if conditions warranted it." The debate centers on whether the Fed believes the economy is overheating in a way that would lead to inflationary pressures. Many economists believe that an overzealous central bank obsessed with fighting inflation could tighten credit too much, halting nearly seven years of economic expansion. Greenspan himself provided few clues, saying that while the Fed remains ready to raise rates if necessary, inflation currently remains low and potentially inflationary economic growth is expected to slow. For now, Wall Street seems to be betting that the Fed will not raise rates, concluding as many economists have suggested that US is in for a mild slowdown after an unexpectedly rapid first quarter growth spurt.