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Tuesday, September 18, 2007

Are Double Digit Rates Coming?

Former Federal Reserve Chairman Alan Greenspan said in an interview published on Monday the Fed would have to raise interest rates to double-digit levels in coming years to thwart inflation.

But double-digit rates, which have not been seen since the 1980s, would not be a long-term fixture, Greenspan said in an interview with USA Today conducted on Friday.

"Double digit is something that is likely to happen for a short period of time," he said, adding it was hard to predict when such a big rate increase would be needed.

The U.S. central bank meets on Tuesday and is widely expected to cut the benchmark federal funds rate by at least a quarter-percentage point to help the economy weather a housing downturn and credit crunch.