Federal Reserve chairman Mr Alan Greenspan is expected to deliver a hopeful but cautious report on the prospects for the US economy when he addresses the US Congress this afternoon.
The Fed chief goes before the House Financial Services Committee at 3 p.m. to deliver the first of his two-part semi-annual testimony on monetary policy as financial markets watch for hints that a flood of interest-rate reductions may be drying up.
Six cuts in short-term rates by the US central bank so far this year - a total of 2.75 percentage points - have produced only mixed indications that the sluggish US economy may be picking up again.
"On balance, Mr Greenspan is likely going to indicate that a good case can be made for a pickup in economic activity within the next several months," said economist Ms Lynn Reaser of Banc of America Capital management in St. Louis.
"But he will leave the door open to a possible further rate cut on August 21st and he will still indicate that the economy faces risks in the near term," she added.
Ms Reaser said Mr Greenspan could make an effective case that the worst is over for the economy, which has been in a downturn since mid-2000, growing at anaemic annual rates of 1 per cent in the final three months of last year and 1.2 in the first three months of 2001.
"The most likely situation is that we have bottomed out and are poised for recovery," Ms Reaser said, "The inventory (overhang) is now largely settled, tax cuts are due to start kicking in and we have lower energy prices."
Cheaper energy gives Mr Greenspan room to repeat his recent assertions that inflation is not a threat, and possibly to emphasise other risks such as the danger that weak business confidence and pressure on profits will crimp investment spending and jobs.
Analysts warn that, with more than a month to go until the next FOMC meeting, the Fed chief has to strike a cautious tone on economic prospects as he weighs the incoming crop of data.
"It would be hard, risky and somewhat misleading for the Fed to provide a clear direction to future policy since Fed officials are divided over the outlook, and the data have been quite mixed," said economist Me Charles Lieberman of Advisors Financial Centre.