Alan Greenspan is 96. He served five terms as Chairman of the Federal Reserve over 19 years and under four presidents. So when he doubts the Fed’s recent rate hikes, many people are listening.

Like CNN reportsGreenspan is economic advisor to Capital Management Advisors. The company announced this on Tuesday comments by Greenspan on its website as part of a “year-end Q&A.” He was clear.

Asked if he thought there could be a recession required to curb inflation, Greenspan said, “A recession seems like the most likely outcome right now.”

“While the last two monthly inflation reports have shown a slowdown in the rate of price increases,” Greenspan continued, “this doesn’t change the fact that prices are still rising. It doesn’t change the methodology by which they are measured, especially housing costs.”

“But,” Greenspan concluded, “I don’t think it warrants a Fed reversal substantial enough to at least avoid a mild recession.”

Also, according to Greenspan, better wages and widespread employment “need to decline further for a pullback in inflation to be more than temporary.”

“So,” he says, “we may have a brief period of calm on the inflation front, but I think it will be too little and too late.”

As for the rate hikes, Greenspan also indicated that the Fed is unlikely to ease them for fear of a worsening of inflation, potentially putting a volatile economy “back to square one”.

In addition, he said, this could potentially damage the credibility of the Federal Reserve as a provider of stable prices, especially if the action was seen to have been taken solely to protect the stock market rather than in response to truly volatile financial conditions. circumstances.”

In the end, Greenspan sounded more optimistic about the economy in 2023 than not. As far as he’s concerned, we’ve been through worse:

I don’t expect 2023 to be that volatile. We went from a Federal Reserve that expected inflation to be transient to one that required seven consecutive rate hikes in ten months to contain inflation. That’s a total increase of 4.25 percentage points in the federal funds target rate, with more expected to follow. Add to that the sheer amount of uncertainty the war created in Ukraine and I believe 2022 would be a tough year to top in terms of market volatility.