Alan Greenspan, the former chairman of the US Federal Reserve and a renowned expert on interest rate policy, has been taken on as a consultant by the operator of the world's biggest bond fund, the Allianz-owned Pacific Investment Management (Pimco).

In a major coup for Pimco, whose bond portfolios will be highly sensitive to interest rate policy, Mr Greenspan will communicate regularly with Pimco executives on economic issues, including providing his private insight about interest rate policy at the US central bank.

This is the first appointment secured by Mr Greenspan since retiring as Fed chairman in February last year, when he was succeeded by Ben Bernanke.

However, public comments he has made in the wake of his departure have rattled markets and irritated US authorities. Mr Greenspan, nicknamed "Maestro", made it clear that his comments to Pimco would not be released into the public domain.

According to The Wall Street Journal this morning, the former head of interest rates policy at the world's biggest economic power will correspond with the Pimco executive through conference calls and e-mails and hold quarterly strategy sessions with the executive.

The paper did not say how much Mr Greenspan would be paid. But it quoted him as saying that he had been in self-imposed purdah on matters of monetary policy for a year and as this time had now elapsed, he felt free to pursue opportunities such as the one at Pimco.

The move will see Mr Greenspan hook up will Bill Gross, the man known as "The Bond King" who is Pimco's chief investment officer. Pimco has about $680 billion of funds under management, almost all of it in fixed income.

Mr Gross's fund, the $104 billion Total Return Fund, has beaten 97 per cent of the competition in the past ten years, with a 6.9 per average annual return, according to Morningstar Inc.

But so far this year, it is in the bottom 20 per cent of its peer group.

"Obviously, I have to be more Greenspan-friendly," Mr Gross, who has not been a fan of Mr Greenspan in the past, told the paper. It carries an anecdote which Mr Gross recounted recently that he once did his homework in the bath, just as Mr Greenspan sometimes writes speeches in the bath because of his bad back.

Mr Gross told the Journal that Mr Greenspan replied: "All that means is we're both concerned about liquidity."

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