Getty Images Former Fed chairman and earmuff proponent Alan Greenspan
Former Federal Reserve Chairman Alan Greenspan on Thursday offered advice to Jerome Powell and the other central bankers who are getting blasted on a seemingly every day basis by the president of the United States.
“The best thing you can do if you’re at the Fed is put earmuffs on and don’t listen,” he said in a CNBC interview.
The former Fed chairman said President Donald Trump’s criticism of Powell was not at all unusual — other than being public.
“Every president” thinks they know more than the Fed about how markets work and where short-term interest rates should be, he said.
Read: The history of presidential Fed-bashing suggests it has not been a fruitful strategy
Asked if he ever received direct pressure from the White House to keep interest rates low, Greenspan replied: “All the time.”
Greenspan, the co-author of a new book on American capitalism, praised Powell, calling him a “first-rate Federal Reserve chairman.”
“His competence is really such that I don’t worry where the Fed is going,” he said.
Tight labor markets will likely cause real interest rates to go up and higher prices to take hold, Greenspan said during the interview. That causes him to worry about stagflation, because gross domestic product will lag due to slow productivity growth, he said.
Stocks opened lower Thursday as investors interpreted the minutes of the Fed’s last policy meeting as hawkish. The Dow Jones Industrial Average DJIA, -0.64% was recently down over 100 points.
See: Fed minutes indicate interest rates will have to rise high enough to slow down the economy
