Alan Greenspan, the former chairman of the Federal Reserve, has said that the "inflation tranquility" experienced over the past two decades could not be expected to continue.

Mr Greenspan, who often faced criticism for cutting rates too quickly during his tenure at the Fed in response to signs of economic weakness, told the BBC: "I'm reasonably confident that the inflation tranquility that we have experienced throughout the world actually for the last 20 years is not something we can hope to readily replicate as we move into the future."

He said that while the danger of recession was "still less than 50/50", it was "not as "optimistic as one would like".

Mr Greenspan also said that the world's major economies needed to continue their efforts to "absorb" financial shocks, even if they are not able to anticipate them.

Citing the terrorist attacks on the United States as an example of "the type of shock which would have destabilised the American economy" in the past, but which had in fact been "absorbed" within four or five weeks, Mr Greenspan said that "increasing the degree of flexibility in our successes" would help the world's financial markets cope with the impact and aftermath of turbulence.

He also aligned himself with Gordon Brown, the Prime Minister, arguing that "the critical issue in economic policy should not be the financial system".

"The financial system is the means to an end. The end of course is the level of material wellbeing, the levels of employment and the types of jobs a country creates."

Amid persistent speculation about the impact of the credit crunch on the property market in the UK, Mr Greenspan said that bubbles were the consequence of a "dramatic decline in real interest rates".

"It's really not something which central banks any longer have control over."

Asked whether, as a leading global economist, he felt a sense of culpability in not being able to recognise turbulence in the markets until after it has begun to take hold, Mr Greenspan said: "I have always argued that particular point, because we have never really successfuly been able to forecast significant turning points in the economy. One of the reasons is that they have to be unexpected."

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