US house prices are likely to fall significantly from their present levels, Alan Greenspan told the FT, admitting there was a bubble in the US housing market. Ahead of Monday’s release of his memoirs, the former Fed chairman suggested that while the house price decline would be “larger” than people expect, his Fed successors – who meet Tuesday to set interest rates – should not ease rates too aggressively amid a heightened risk of an “inflationary resurgence”. In his memoirs, Mr Greenspan, a lifelong Republican, criticises his party for abandoning its small-government principles, and warns that the trade-off between inflation and growth is likely to worsen. Looking to the Fed’s policy meeting Tuesday, Lex warns that “now is not the time for surprises”.

This entry was posted by Gwen Robinson on Monday, September 17th, 2007 at 5:14 and is filed under Capital markets, People. Tagged with alan greenspan. Edit this entry.