Greenspan sees sustainable inflation well above the Fed’s 2% target. – News Couple
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Greenspan sees sustainable inflation well above the Fed’s 2% target.


(Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said he sees a persistent threat of significantly higher inflation.

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He said that while some of the forces driving prices higher are likely to be transient, rising government debt and other fundamental pressures may keep inflation high on a long-term basis.

“The trend toward inflation, unfortunately, remains well above the average of about 2% over the past two decades,” he wrote in a note released Monday by Advisors Capital Management.

Consumer prices rose 5.4% in September from the previous year, matching the largest annual gain since 2008, due to supply chain bottlenecks and still-strong consumer demand.

Greenspan, chief economic adviser to Capital Management Group, said the Fed may need to rein in its support for the economy if more fiscal stimulus is fueling demand. The central bank has an average inflation target of 2%.

President Joe Biden is in the midst of protracted negotiations with congressional Democrats aiming to reach an agreement soon on a nearly $2 trillion social spending package over 10 years.

Fed policymakers, who have described the recent rise in inflation as largely fleeting, are widely expected to announce plans to start reducing their $120 billion in bond purchases per month after their meeting next week.

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