But Greenspan also told the Senate Banking Committee that the economy is reaping the fruits of a "marked pickup in technological innovation" that has boosted productivity and translated into rising living standards for millions of Americans.

"Our challenge in monetary policy is to foster, as best we can, the financial conditions that will allow this economic expansion and technological revolution to continue as long, and as vigorously, as possible," Greenspan said in his prepared testimony for the committee.

In his brief opening remarks, Greenspan provided no hints about the Fed's next moves on interest rates. But he stressed that the central bank clearly understands its most important job in supporting the U.S. economy's long expansion, which next month will set an all-time record for length, is to fight inflation.

"Experience has demonstrated that an essential ingredient in this prosperity, and an ingredient for which the central bank has ultimate responsibility over the long run, is low and stable inflation," Greenspan said. "Maintaining price stability ... reduces the likelihood that imbalances could develop that would ultimately undermine economic expansion."

Stock prices took a huge tumble Monday, partly on fears about what Greenspan would say in his testimony before Congress this week.

Most economists believe the central bank, which last year boosted interest rates three times in an effort to keep the red-hot economy from overheating and triggering rising prices, will boost rates a fourth time at its meeting next week. So far, there are few signs that the Fed's earlier interest rates moves have had the desired effect of slowing economic activity.

Greenspan, 73, was nominated earlier this month by President Clinton for a fourth term as chairman of the Fed. He has headed the central bank since 1987 when Ronald Reagan selected him to succeed former Paul Volcker. He was renominated for a second term by George Bush in 1992 and by Clinton in 1996.

The nomination is expected to meet little resistance. The Senate Banking Committee chairman, Sen. Phil Gramm, R-Texas, said before the hearing that he expected his committee would vote on Greenspan on Tuesday. He said he hoped to bring it before the full Senate quickly after that vote.

Senate Majority Leader Trent Lott, R-Miss., predicted Tuesday that approval for Greenspan "will go quickly" and he praised what he called "a smart move by the president" to select Greenspan rather than someone else to head the Fed.

Clinton had been expected for months to offer the Fed chairmanship to Greenspan again, given that the Republican-controlled Senate was unlikely to approve any other appointment by a Democratic president in his last year in office.