Greenspan doubts Fed's ability to prevent recession
Greenspan doubts Fed's ability to prevent recession - Yahoo! News
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BERLIN (AFP) - Former Federal Reserve chief Alan Greenspan cast doubt on the ability of the central bank to prevent a US recession in an interview to appear on Thursday.
Greenspan told the German weekly Die Zeit that the Fed or political policies could "probably not" keep the world's biggest economy from sliding into recession, as financial markets widely expected the US central bank to cut its main lending rate.
"The influences of the global economy today are stronger than almost any monetary or budgetary response," the German-language weekly quoted Greenspan as saying.
Although he left the post of Fed chairman two years ago, Greenspan's opinions on the economy are still sought after.
"Real long-term interest rates have much more influence over the heart of economic activity than national decisions," he was quoted as adding.
"And central banks have less and less power to influence long term rates."
The former Fed chief put the chances of a US recession at 50 percent, but added:
"We have few indications that would allow us to say we are already there."
Some analysts have said that low interest rates under Greenspan's watch were responsible in part for the US housing bubble that burst last year, and led to the current financial crisis.
Die Zeit quoted him as saying he found it hard to understand that "the Federal Reserve policy had somehow allowed housing and stock prices to rise."