31.   Driving rates higher was a perception that the economy is heating up, and that means inflation may be rising at a faster rate than previously thought.

32.   For now, official reports show little evidence inflation is rising.

33.   Gilts had fallen earlier after the government reported a wider-than-expected deficit and Bank of England Governor Eddie George expressed concern that British inflation could rise.

34.   German bonds, which give investors lower returns when inflation rises, got a boost from the forecast.

35.   Greenspan also repeated his previous criticisms of the economic theory that unemployment can be reduced by allowing inflation to rise.

36.   He also said inflation could rise as record low unemployment could force wages higher.

37.   Greenspan warned inflation might rise and stock prices may be too high, sending U.S. bonds and stocks down.

38.   He cited wage increases, depreciation of the rand over the past year, acceleration in the rate of increase in the money supply and expectations inflation will rise.

39.   High unemployment supports bonds by reducing the amount of money consumers have to spend, lowering expectations inflation will rise.

40.   If inflation rises and the economy slips into recession, Wal-Mart might slow its expansion there.