WASHINGTON – The economy is on “reasonably firm footing” and isn’t fanning worrisome inflation, Federal Reserve Chairman Alan Greenspan told lawmakers yesterday.

The Fed chief, in his most extensive remarks on the economy since February, gave a largely upbeat assessment of the country’s economic health to Congress’s Joint Economic Committee.

Mr. Greenspan didn’t signal a pause in the Fed’s campaign to tighten credit – as some analysts thought possible. Instead, he repeated Fed policy-makers’ stance that short-term interest rates can be raised at a pace that is likely to be “measured.” Analysts have come to view that as gradual, quarter point bump-ups.

Over the past year, the pace of economic activity has “alternatively paused and quickened,” an uneven expansion that to a significant degree is related to the impact of gyrating energy prices, Mr. Greenspan said.

A recent pickup in economic indicators, however, suggested the economic pothole the country hit in early spring wasn’t a harbinger of “a more serious slowdown,” Mr. Greenspan said.

To keep the economy and inflation on an even keel, the Fed has boosted rates eight times since June 2004. Analysts expect another increase June 30.

After that, opinions are mixed. A mixed employment report, released by the government last week, helped to fuel speculation that the Fed’s credit tightening campaign might slow or possibly stop.

Mr. Greenspan, however, clicked off statistics including the unemployment rate’s dip to 5.1% in May, the lowest since September 2001, to buttress his point that the economy is in good shape.

Mr. Greenspan said there appear to be signs of “froth in some local markets where home prices seem to have risen to unsustainable levels,” he said.

Still, if house prices were to decline in some local markets, Mr. Greenspan doubted that would have “substantial” implications for the economy.

But the dramatic increase in interest-only mortgages and the introduction of relatively exotic forms of adjustable-rate mortgages are of concern, he said.