Following U.S. Federal Reserve Board chairman Alan Greenspan’s comments to Congress this morning, Merrill Lynch & Co. Inc. says that it sees at least one, maybe more, rate cuts still ahead in the United States.

Bruce Steinberg, Merrill’s chief economist, says, “Greenspan’s testimony is generally as expected. He expressed cautious optimism that the economy will improve later in the year however, we are not seeing too much improvement as of yet.”

Steinberg says that Merrill currently believes that it’s clear that the Fed will cut rates at it next meeting, scheduled for August 21, “and that there may be more than another 25 basis points of easing ahead”.

The Fed’s projections for the U.S. economy are not particularly strong for either the remainder of this year, or for next year. Steinberg says that the Fed’s growth estimates for both 2001 and 2002 are below Merrill’s own. “The Fed is projecting 3% growth in 2002 vs our estimate of closer to 4%.”

During the question period with Congress, Greenspan said he thinks we’ll see things improving toward the end of this year, and certainly next year, but he is characteristically cautious, noting, “You can’t forecast that.”

Merrill’s Steinberg concludes, “While the Fed may be near the end of its easing process, it’s not there yet, in our opinion.”