Greenspan's legacy: an activist unafraid to depart from the rules

When Alan Greenspan attended his first Washington Nationals baseball game at the start of this month, he received a hero's welcome. Security guards urged the Federal Reserve chairman to sit in an air-conditioned executive suite but Mr Greenspan, a true baseball fan, chose a seat in the stands in the heat of the Washington summer. The 79-year-old central banker, who for 18 years has presided over the setting of US interest rates, was cheered as he arrived. People nearby asked him to autograph their tickets. From further back there were shouts of "Go Alan!" and "Yeah, Alan, keep 'em low".

The Fed chief is due to step down at the end of January, when his term on the central bank's board of governors expires.

Mr Greenspan took over at the Fed on August 11 1987 - less than two weeks before "Black Monday", when the Dow Jones industrial average dropped 22.6 per cent; the largest daily fall in the history of the US stock market. Mr Greenspan's immediate response, saying the Fed would pump money into the financial system to maintain liquidity, helped to put an end to worries about how the central bank would fare after the departure of Paul Volcker, his predecessor.

Since then US economic growth has averaged about 3 per cent a year and the annual rise in the consumer price index has also averaged about 3 per cent. Unemployment has averaged slightly more than 5½ per cent. Mr Greenspan has cemented the Fed's anti-inflation credibility but his reputation has been built on the flexibility he has shown. The challenge for his successor will be to match Mr Greenspan's record of getting the big calls right.

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