Alan Greenspan, the US Federal Reserve chairman, on Friday warned that high asset prices and growing protectionist pressures would complicate his successor's task. Mr Greenspan, who in January retires after 18 years, was speaking at the Fed's Jackson Hole Symposium, sponsored by the Kansas City Fed.

Mr Greenspan said maintaining flexibility was the best way to deal with shocks to the economy and imbalances, including the housing market boom and the US current account deficit, which is 6 per cent of GDP and rising. He said this flexibility meant imbalances could “be rectified by adjustments in process, interest rates and exchange rates rather than through more wrenching changes in output, incomes and employment”. Mr Greenspan warned that growing protectionist pressures were a threat to flexibility.