U.S. Federal Reserve Board chairman Alan Greenspan’s testimony to Congress today was as ambiguous as ever, Canadian economists say.

Bank of Montreal says that Greenspan’s testimony on the economy was slightly skewed towards the positive, though gloomier than expected. “Though the testimony did not suggest any rate move was imminent, it left a surprising amount of ambiguity as to whether the next move would be to tighten or to ease,” says BMO. He referred to the strong housing market and improved payrolls, but expressed concern about rising household debt levels. On the negative side, Greenspan noted that there has yet to be “convincing signs of a rebound in business outlays.”

BMO Nesbitt Burns’s chief economist, Sherry Cooper, says, “Fed chairman Greenspan outdid himself this morning with the most densely oblique rhetoric ever heard in a Monetary Policy Report to the Congress. It was difficult to force myself to read through the eight pages of text, including a discourse on such scintillating subjects as accrual accounting for the federal budget and the urgency of extending budget enforcement rules.”

“On balance, there were no new revelations in the chairman’s prepared remarks,” says Cooper. “The Fed clearly will remain on the sidelines until after the Iraqi uncertainty dissipates, at which time they will watch to see if the economy rebounds as they expect. If not, the Fed will ease; but the likelihood is, as Greenspan himself said, that rebounding business and consumer confidence will trigger a burst of spending that will reignite economic activity making another Fed rate cut unnecessary.”

Cooper says that in the Q and A with senators, Greenspan did support the elimination of double taxation on dividends, but he said he would prefer it be done at the corporate level rather than the investor level. “He coupled this with continued support of fiscal stringency and debt repayment, but he managed to obfuscate the issues sufficiently to give both the Democrats and Republicans fodder for their positions. He doesn’t see the need for short-term fiscal stimulus for the same reason that further monetary easing is, in his view, unnecessary-the economy will bounce back once geopolitical uncertainty dissipates. He did acknowledge, however, that his conviction to that view has waned in recent weeks. He also admitted that he is one of the few economists who still believe that fiscal stimulus is unwarranted.”