LAWFUEL – The Legal Newswire – Financial fallout in the mortgage markets are set to continue if Alan Greenspan is correct.
Greenspan has said the turmoil in credit markets was an “accident waiting to happen”, and has also warned of much higher UK inflation in future years, the BBC rfeports.
Inflation would rise above 3% on a regular basis, putting pressure on interest rates, and the UK housing boom would soon come to an end, he said.
He said it was too early to say if the current financial crisis would be more damaging than that seen in 1998.
“This has not fully played out,” he told the Daily Telegraph.
Bank governor Mervyn King was forced to write a letter to the Treasury earlier this year explaining why inflation had risen above 3%, well above the government’s 2% target.
Mr Greenspan said this would become a more regular occurrence as the Bank had to deal with the prospect of higher inflation and higher interest rates.