WASHINGTON, Feb 10: Former Federal Reserve chairman Alan Greenspan has shown he can still impact financial markets even after leaving the helm of the powerful US central bank.
Greenspan, who stepped down on January 31 after 18 years as Fed chairman, did not escape attention this week when he spoke to a “private” dinner organized by Wall Street’s Lehman Brothers — for which he was paid $250,000, according to the New York Post.
“Greenspan’s comments at a number of private events were dollar-bullish,” according to Tania Kotsos, strategist at RBC Capital Markets.
Kotsos said reports indicated that Greenspan “was upbeat on the economy and the dollar as he said that the low level of long-term bond yields may mean that official interest rates would have to rise more than otherwise.”
Despite his departure from the Fed, many analysts believe Greenspan has a great deal of insight into the central bank’s outlook and how high it is likely to lift interest rates.
While the comments have been disturbing to some in financial markets, most analysts say he has a right to speak his mind.
“He is talking to the heaviest hitters around and ones that can move markets,” said David Gilmore at Foreign Exchange Analytics.
“Greenspan knows the game. To charge top premium for his appearances, he needs to disseminate actionable insights. And less than a week after leaving the Fed, I would say insights resemble more objective truths than subjective opinions.”
Gilmore said Greenspan’s views “are most actionable right now and will become less actionable as time progresses. He knows this, the Street knows this, and so do the rest of the investment community unlucky enough to hear about it hours after the fact yet know this.”
The analyst noted that the Fed “has already issued a statement clearing Greenspan or any Fed Board resignee to speak freely to whomever and wherever he or she likes. The only caveat is that he must not divulge sensitive information.”—AFP
