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Last Updated: Tuesday, 31 January 2006, 00:01 GMT
Greenspan tees up last rate rise
Alan Greenspan
Greenspan is seen as helping the US through difficult economic times
Federal Reserve chairman Alan Greenspan will preside over his last rate meeting on Tuesday before retiring after almost 19 years at the central bank's helm.

Analysts expect interest rates to rise by a quarter of a percentage point to 4.5%, the 14th increase in a row.

While Mr Greenspan will leave a legacy that lauds him as the guardian of the US economy, a number of problems are hanging over the recovery at present.

He is expected to be replaced by former Fed colleague Ben Bernanke.

"This is Greenspan's last hurrah. The swan song for the big guy," said Richard Yamarone, an economist at Argus Research.

'Some bubbles'

The 79-year-old Mr Greenspan is credited with guiding the US through the stock market crash of 1987, the dotcom bubble of 2000 and the 9/11 attacks.

The US economy is currently recovering thanks in large part to interest rate cuts that pushed borrowing costs to 1%, their lowest levels for 46 years.

Steady rate rises since then have managed to control inflation and price stability without slowing growth.

However, the low rates also may have led to some of today's problems and Mr Greenspan has been criticised for giving his backing to policies such as tax cuts in 2001.

"There are some of us who believe he aided and abetted some asset bubbles," said Paul Kasriel, chief economist at Northern Trust in Chicago.

Set for a quiet farewell, the former jazz musician is leaving behind an economy that has a number of shadows hanging over it, including a large US trade deficit and a government budget deficit that may hit $400bn (227bn) this fiscal year.

"We really don't want to give Greenspan a grade yet," said Mr Kasriel. "You want to wait a year or two to see whether the seeds turn to weeds."

After leaving the Fed, Mr Greenspan, who likes to mull over problems in the bath, plans to open a consultancy and may write a book.

Investors discuss the legacy of Alan Greenspan

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