CHICAGO - Recent commentary on the U.S. economy by former Federal Reserve chief Alan Greenspan has rocked financial markets but analysts are split on whether those appearances have made the Fed's job tougher.
A Reuters poll of 17 economists on Friday showed just over half thought Greenspan's frequent appearances had become an issue for the Fed.
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Some primary dealer firms — those designated by the Fed to deal with it in trading U.S. government securities — agreed, although others thought the issue was being overplayed.
"In a sense it has made conditions more difficult as markets have been more volatile partly because of what Greenspan has said. But overall I don't think it will make any difference to the Fed's policy," said Stephen Webster, economist at 4CAST Ltd. in London.
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Those concerned about the "Greenspan factor" said volatility created by his utterances, or interpretations of comments made in private meetings, can obscure the economic fundamentals central bankers key off in policy deliberations.
Greenspan, who retired in January 2006 after some 18 years at the helm of the U.S. central bank, has hit the high-paid speaking circuit with a vengeance through his company Greenspan Associates LLC.
This week Greenspan, who turned 81 on Tuesday, suggested he is just trying to scratch out a living.
"I have a profession and I'm a private citizen," he said in response to a question from Reuters after speaking at a trading technology conference in New York. "I say things, but so does everyone else. Why am I different from everybody else?"
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A Feb. 26 Greenspan comment that it was "possible" the U.S. economy might fall into recession by year-end contributed to a massive slide on global equities prices that day. Key U.S. indexes lost more than 3 percent that day.
On March 1, Greenspan was reported to have told a private forum in Tokyo that recession was possible but not "probable." Both appearances were via satellite.
Greenspan stirred the pot this week by telling Bloomberg News there is a one-in-three chance of recession this year.
That contrasted with the view offered recently by Fed Chairman Ben Bernanke, who told Congress last week that the economy may strengthen this year. Other top Fed officials have also been fairly upbeat recently.
Greenspan's commentary "challenges the assumptions that the Fed's policy is based on, and the credibility of its stance," said Lena Komileva, G7 market economist at Tullet Prebon in London.
One problem with Greenspan's comments is that they often circulate under the radar and more as rumor than fact.
Avery Shenfeld, senior economist at CIBC World Markets in Toronto, said he would prefer Greenspan to clarify his comments at the time, rather than after the fact.
Greenspan's next known appearance is on Thursday at the Futures Industry Association annual conference in Boca Raton, Florida.
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