(From Reuter's and Yahoo!)

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Thursday January 25 12:18 PM ET
Economic Growth 'Very Close' to Zero -Greenspan

WASHINGTON (Reuters) - The U.S. economy has slowed so sharply that it may not be growing at all, Federal Reserve Chairman Alan Greenspan said on Thursday.

Greenspan, however, did not use the word ``recession'' to describe the economic situation.

``As far as we can judge, we have had a very dramatic slowing down and indeed we are probably very close to zero at this particular moment,'' Greenspan told the Senate Budget Committee when asked if the U.S. economy is in a recession.

Further, Greenspan said inflation pressures were ''exceptionally well contained.''

U.S. treasuries lurched higher after Greenspan's remarks, which were seen as suggesting that the Fed may cut rates aggressively after the conclusion of its policymaking meeting on Wednesday.

While markets have widely expected the Fed to cut rates next week, a lingering question has been whether it would lower rates a quarter-percentage-point or a more dramatic half point.

Greenspan said the economy grew a small amount in the fourth quarter and said firms were in the process of liquidating their inventories in light of the slowdown.

The Fed chief also noted that consumer confidence was a key determinant in keeping the economy on track.

The powerful Fed chief, who declined to comment on the possible outcome of the Jan. 30-31 rate-setting meeting, noted that the widely used definition of a recession -- two quarters of contraction in growth -- was a ``fairly crude'' measure and noted that defining a recession required much more analysis.

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