New York CNN —Former Federal Reserve Chairman Alan Greenspan believes a US recession is the “most likely outcome” of the Fed’s aggressive rate hike regime meant to curb inflation.
In the 12 months that followed February 1994 Greenspan nearly doubled interest rates to 6% and managed to keep the economy steady, avoiding recession.
Greenspan, now 96, said in a note this week that he doubts this current bout of hikes will result in a repeat performance.
Wage increases and, by extension, employment, “still need to soften further for a pullback in inflation to be anything more than transitory,” said Greenspan.
Greenspan doubts the Fed will loosen interest rates soon because “inflation could flare up again and we would be back at square one,” he said.