Greenspan predicts 10 per cent inflation

Inflation will rise to about 5 percent in Europe and the United States, said former Federal Reserve Chairman Alan Greenspan in an interview with a Dutch paper, published on Monday. Interest rates would have to rise towards 10 percent because of higher inflation, Greenspan told NRC Handelsblad. "The lower inflation of the last two decades will turn out to be a once-only event, the exception that confirms the rule," Greenspan was quoted as saying. "The normal inflation level is closer to 5 percent than the current 2 percent," Greenspan said, adding that the 5 percent level fitted an economy with a "paper" standard, where currency is not linked to gold.