Washington ? Federal Reserve Chairman Alan Greenspan told Congress Wednesday that prospects for the U.S. economy have brightened but he sent a clear signal the central bank is in no rush to raise interest rates. He said inflation pressures, despite surging oil prices, are well-contained.

In his first testimony on the economy since early March, Greenspan sought to assure jittery financial markets that the central bank feels no need to start raising a key interest rate, the federal funds rate, which is at a 40-year low.

Federal Reserve Board chairman Alan Greenspan testifies during a Joint Economic Committee hearing on Capitol Hill. Greenspan told Congress Wednesday that inflationary pressures are well-contained.

“To be sure over time, the current accommodative stance of monetary policy is not likely to be consistent with maintaining price stability. But prospects for low inflation and inflation expectations in the period ahead mean that the Federal Reserve should have ample opportunity to adjust policy to keep inflation pressures contained once sustained, solid, economic expansion is in view,” he told the Joint Economic Committee.

Greenspan’s testimony was right in line with the expectations of most private economists. They predicted the central bank will begin to raise rates but probably not until August, with policy-makers preferring to allow the recovery from the last year’s recession to take hold.

Financial markets did not receive a boost from Greenspan’s testimony. The Dow Jones industrial average was down 80.54 points in trading Wednesday.

“The markets are torn. They like the idea that there will be no immediate hike in interest rates. But Greenspan’s statement about the uncertain economic future doesn’t really support healthy increases in stocks,” said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis.

Last December, the Fed completed its most aggressive rate-cutting campaign in decades, pushing the funds rate, the interest that banks charge each other on overnight loans, down to a 40-year low of 1.75 percent.

Since that time the central bank has left rates unchanged. But at its last meeting, in March, it changed its policy directive, used to signal future moves, to a neutral stance, away from one stating that the greatest risk was economic weakness.

That shift sparked speculation in financial markets that the Fed was on the verge of starting to raise rates, with some economists forecasting the first rate increase could occur as soon as the next meeting in early May.

But that view had begun to change in recent weeks as various Fed regional bank presidents gave speeches indicating they were not yet concerned about building inflation pressures.

Greenspan noted that the Fed on March 19 had said the economy was expanding at a “significant pace” because of a big swing in inventory investment but that final demand by consumers and businesses was still uncertain.

“Little, if anything has happened since the … meeting to alter that assessment,” Greenspan said.

The Fed and private economists project the current recovery will not become firmly entrenched unless consumers, who are carrying near-record levels of debt, keep spending and businesses reverse their steep cuts in investment, reductions that played a big part in triggering the recession.

Greenspan did note some encouraging signs, saying demand seems to be increasing for some forms of high-tech equipment, including semiconductors and computers.

“But investment expenditures in the communications sector, where overcapacity was substantial, as yet show few signs of increases and business investment in some other sectors, such as aircraft, hit by the drop in air travel will presumably remain weak in 2002,” he said.