Washington, Nov. 13 (Bloomberg) -- Interest rate cuts are helping the U.S. economy and the Federal Reserve has other tools it can use to stimulate growth, Fed Chairman Alan Greenspan told Congress.

Greenspan said the Fed has not run out of ammunition after 12 straight reductions brought the overnight bank-lending rate to 1.25 percent, the lowest in 41 years. Even if that rate were zero, the Fed might keep increasing purchases of Treasury securities to put money into the economy, he said.

``We do have the capability, if required to do so, to go well beyond activities related to short-term rates,'' Greenspan said in testimony to the Joint Economic Committee of Congress.

The economy faces neither inflation nor deflation and companies are more productive, Greenspan said. Rising home prices, tax cuts and extended unemployment benefits have helped keep consumer spending from falling off as much as some economists predicted. Punishing corporate wrongdoers and resolving tensions with Iraq may help remove doubts, he said.

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