Fed Must Avoid Greenspan Trap

If global growth concerns make the Federal Reserve wait to raise short-term interest rates, the central bank risks falling into the “Greenspan trap” and contributing to long-term turmoil, one economist said Wednesday.

“The question is whether the Fed will fall into the Greenspan trap and pay too much attention to what’s going on internationally and not enough attention to what’s going on domestically,” said Samuel Rines, an economist and analyst at Chilton Capital Management.
Rines references former Fed Chairman Alan Greenspan, who led the central bank in the easy money era ahead of the burst of the housing bubble in the mid-2000s. As the Fed decides when to move from near-zero interest rates at its two-day policy meeting, it should worry about the effects of waiting too long, Rines contended in a CNBC “Power Lunch” interview.

Via CNBC

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