Federal Reserve Chairman Alan Greenspan told Congress on Wednesday that the economic expansion rolled into the new year at a respectable pace and that inflation — while not an immediate threat — is something policy-makers must continue to guard against.

Greenspan, delivering the Fed’s twice-a-year economic outlook to lawmakers, struck a fairly positive tone about the economy, which had been mired in a midyear lull last year and has since improved.

“All told, the economy seems to have entered 2005 expanding at a reasonably good pace, with inflation and inflation expectations well-anchored,” Greenspan said in prepared testimony before the Senate Banking Committee.

How inflation fares in the coming months will shape whether Fed policy-makers — now on a gradual path of raising short-term interest — will need to speed up or slow down that campaign, Greenspan indicated.

One factor to keep an eye on is whether companies — amid slowing productivity growth — boost workers’ salaries and then pass along those higher costs onto customers, the Fed chief said.

“Going forward, the implications for inflation will be influenced by the extent and persistence of any slowdown in productivity,” Greenspan said.

The inflation outlook also will be shaped by the direction of oil prices and the value of the dollar, which has been falling over the last few years.

Federal Reserve policy-makers embarked on a rate-raising campaign in June and have pushed up short-term interest rates six times, each in modest, quarter-point moves. The last rate increase on Feb. 2 left a key rate at 2.50 percent. Another rate boost is expected at the Fed’s next meeting on March 22.

Economists viewed Greenspan’s remarks on the economy as buttressing their view the Fed for now will stick to its gradual approach to raising rates.