‘We should be relatively worried’ approximately bond expenses, warns long-time Fed chair Alan Greenspan

 “We have to be rather frightened,” the previous Federal Reserve chairman said in an interview Thursday with Bloomberg television.

The yield on 10-year Treasuries sank to a record 1.318 per cent on July 6. Treasuries have rallied in 2016 as the Fed held off on elevating prices after liftoff from near zero in December, while vital banks in Japan and Europe maintained unparalleled stimulus. policy makers on Wednesday left the federal funds rate at zero.25 per cent to 0.five per cent whilst pronouncing close to-time period dangers to the economic outlook had been dissipating.

The U.S. may be heading closer to stagflation — a sluggish-growth economy coupled with excessive inflation, Greenspan stated. That condition isn’t well matched with lengthy-term hobby charges of one per cent to 2 according to cent. There’s a full-size quantity of uncertainty and “popular sluggishness” inside the economic system, that's tied to low productiveness, he said.

“What I’m involved approximately often is stagflation, which means I think we’re seeing the very early signs of inflation beginning in the end to choose up as the difficulty of deflation fades,” Greenspan said. “We’re just in a stagnation nation. I don’t see the speculative elements that normally represent a recession.”