Former Federal Reserve chairman Alan Greenspan has been hired as a bond trading strategy consultant to Newport Beach-based Pacific Investment Management Co.
Greenspan, 81, is expected to provide Pimco’s Chief Investment Officer Bill Gross with insight on the Federal Reserve’s interest rate policy. He’s also expected to speak at quarterly meetings and with Pimco managers up to twice a week.
Financial terms and the length of the contract weren’t released.
Pimco, part of Germany’s Allianz AG, has nearly $700 billion under management, most in corporate and government bonds.
Greenspan stepped down as Federal Reserve chairman in 2006 and became a paid speaker and consultant. He started Greenspan Associates LLC.
Pimco approached Greenspan for the consulting role more than a year ago, according to the Wall Street Journal. At that time, Greenspan stayed clear of speaking about Fed policy because of knowledge gained in confidentiality in his former position.
Pimco is set to look to Greenspan for insight on interest rates. At the Federal Open Market Committee’s last meeting earlier this month, Greenspan successor Ben Bernanke said the Fed’s key short-term rate would be left unchanged at 5.25%.
Gross has said that he sees inflation inching higher in the next year with a prediction that the Fed will cut the rate by the end of the year due to a weaker economy.
Greenspan’s near-term outlook has been less than negative.
He has suggested the U.S. economy may stagnate. In February, he said the U.S. economy had a third of a chance of going into recession.
The global selloff that ensued after his words left many to believe his insights still hold punch.
Bernanke has predicted a modest economic rebound later in the year.
