Higher interest rates are virtually guaranteed, according to former Federal Reserve Chairman Alan Greenspan. Speaking on Wednesday at the Global Private Equity Conference in Washington, DC. Greenspan reiterated that helping the Fed and other central banks reduce overall debt is a necessity in order to reduce bond market volatility.
Dashing hopes of future financial normalization, Greenspan said, "Just remember we had the 'taper tantrum.' And we're going to get another one."
"This is a very tough period to get through," he added regarding the Fed increasing interest rates.
According to Greenspan, the economy had "improved somewhat" but "we are still below normal." Pointing to a GDP that grew about 0.2 percent in the first quarter, Greenspan expects this estimate to drop by the time adjustments are finalized. Analysts project second quarter growth at 3.3 percent but Greenspan is pessimistic about that happening.
Meanwhile, the U.S. dollar was lower on Thursday following the poor report on U.S. retail sales figures, disappointing investors looking for some sort of economic recovery and postponing a possible start date for a rate hike by the Federal Reserve.
The Commerce Department report on Wednesday showed $436.8 billion in April retail sales, practically unchanged from March following estimates that sales would grow at least 0.2 percent and calling into question Wall Street experts who blamed the economic slowdown this year on the brutal winter weather.
"The continuing weakness of retail sales in April brings into question our working assumption that the soft patch through the winter months was largely due to the unseasonably cold temperatures in the Northeast," Paul Ashworth, chief U.S. economist at Capital Economics.