Dropping Gulf dollar peg would ease inflation: Greenspan

[CGowen]

By Souhail Karam and Stanley Carvalho

JEDDAH/ABU DHABI (Reuters) - Former Federal Reserve Chairman Alan Greenspan said on Monday near-record Gulf Arab inflation would fall "significantly" were the oil producers to drop their dollar pegs, in contradiction to Saudi policy.

The pegs restrict the Gulf's ability to fight inflation by forcing them to shadow U.S. monetary policy at a time when the Fed is cutting rates to ward off recession and Gulf economies are surging on a near five-fold jump in oil prices since 2002.

Rifts are growing across the world's top oil-exporting region on how to tackle inflation which hit a 27-year peak of 7 percent in Saudi Arabia in January and a 19-year peak of 9.3 percent in the United Arab Emirates in 2006, the most recent figure.

"In the short term free floating ... will not fully dissipate inflationary pressure, although it would significantly do so," Greenspan told an investment conference in Jeddah, Saudi Arabia's second-largest city.


...

http://www.reuters.com/article/ousivMolt/idUSL2515874520080225?sp=true

[phantom power]

1. Yeah, but it's been a *brake* on our inflation.

Oh well. It was going to happen sooner or later.

[CGowen]

2. Yep.....n/t

[AnneD]

3. And what, pray tell...

in this man's track record would lead one to think that Greenspan knows what he is doing?