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Greenspan warns of higher long-run inflation: report

NEW YORK (Reuters) - Former Federal Reserve Chairman Alan Greenspan warns in his memoir that if the Fed is to keep the inflation rate between 1 and 2 percent in coming years it could be required to force interest rates much higher, according to a report in the Wall Street Journal.
Posted : Sat, 15 Sep 2007 01:08:08 GMT
Author : Reuters
Category : US (Business)
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NEW YORK (Reuters) - Former Federal Reserve Chairman Alan Greenspan warns in his memoir that if the Fed is to keep the inflation rate between 1 and 2 percent in coming years it could be required to force interest rates much higher, according to a report in the Wall Street Journal.

However, Greenspan said he fears the Fed will face "populist resistance from Congress, if not from the White House" to its policy of maintaining price stability.

He said if the Fed succumbs to that pressure, the inflation rate could rise to an average of 4 to 5 percent by 2030, and 10-year Treasury yields will rise to at least 8 percent with the potential to go "significantly higher for brief periods," the newspaper report said.


(c) Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

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