Mr Alan Greenspan, chairman of the US Federal Reserve, said yesterday that the high-flying US economy was moving into better balance, but made clear he had not yet made up his mind whether US interest rates had risen enough.

"We will know more, I presume, by the time of our next meeting," Mr Greenspan told lawmakers after testifying at the House Banking Committee.

"At that particular point we will make a judgment as to whether or not further action - or no action - is the most appropriate policy for the purpose of creating a more balanced economy with the capacity to continue this quite extraordinary 112-month expansion."

The Fed, which has raised rates six times in the last year in an effort to cool the economy, next meets to mull monetary policy on August 22nd.

Mr Greenspan said the economy had moved closer to balance in the last few months, but demand was still outstripping supply - a warning signal to those watching for inflation.

"The data that we have for the first quarter still suggests as of then it was out of balance," he said.

"We seem to be moving closer to balance . . . but we do not as yet have adequate data to suggest how much closure has occurred."

Elaborating on comments he made last week about the US labour market, Mr Greenspan acknowledged that some economists believe that the jobless rate of 4 per cent, which is near a 30-year low, was signalling an inflationary imbalance.

But he added: "I personally don't believe that."

Mr Greenspan said there was a level at which the job market could become so tight, it could destabilise the economy.

Financial markets remained calm as the Fed Chairman delivered the second round of his semi-annual monetary testimony. His formal remarks mirrored those he made last week to the Senate Banking Committee.

Investors last week cheered as Mr Greenspan welcomed signs that the scorching US economy was slowing to a healthier pace. But in both the Senate and House appearances he emphasised that the signs of a slowdown were still tentative.

Still, many investors have been encouraged by the fact that Mr Greenspan spent so much of his time in the formal testimony discussing the reasons the economy may have slowed.