U.S. Federal Reserve chairman Alan Greenspan told the U.S. House of Representatives’ budget committee Thursday that the U.S. economy appears to have withstood the blows of Sept. 11, falling stock markets, and a sharp pull-back in investment spending.

However, Greenspan warned that “depressing effects still linger and continue to influence, in particular, the federal budget outlook.”

Greenspan admonished legislators not to go on a spending spree saying “now is not the time to abandon the discipline and structure that worked so well for so long.”

He said that lax fiscal discipline would “eventually push up interest rates, crowd out capital spending, lower productivity growth and force harder choices upon us in the future”.

The Fed’s next scheduled interest rate policy meeting takes place Sept. 24. Economists remain divided on whether the U.S. central bank will move to raise or lower interest rates.