Fed chief talks up Wall Street

NEW YORK – With seven months left in his term, Federal Reserve Chairman Alan Greenspan is trying to win back business confidence, manage interest rate policy and keep a cork on inflation, all with an eye toward the legacy he’ll leave his successor.

It’s a tricky balancing act, but Wall Street seems confident the avuncular Fed chief of 18 years can pull it off – and perhaps goose growth in the second half while he’s doing it.

It goes without saying that Greenspan will want to make the most of his speaking opportunities during his final months in the job. He’s proven himself a remarkable steadying influence on the market; a case in point was the performance of stocks on Thursday. Wall Street got off to a slow start, but ended on a positive note after Greenspan delivered a bullish assessment of the economy to Congress. The fact that he’ll stay in office through the end of the year has many analysts feeling upbeat about the rest of 2005.

“This will be a good year in the market. It may not be a great year, but it’ll be a good year. Greenspan isn’t going to let this fall apart,” said Michael Murphy, managing partner at the Piney Run Group in Baltimore. “My concern is going to be for next year, when they try to replace him. You know how the market hates uncertainty.”