In comments made at an event in New York on Monday, former US Federal Reserve head Janet Yellen is warning that the Fed could already be done raising rates for this particular cycle.
Key quotes
“If there is a downturn in the global economy and that spills into the U.S. … It’s very possible we may have seen the last interest rate hike of this cycle,” she said at the National Retail Federation’s annual Big Show event in New York.
If Yellen is accurate, her views would fit into the market’s thinking but would be contrary to expectations from central bank officials themselves. “Perhaps another rate hike or two is perfectly possible, but nothing is baked in,” Yellen said during her comments to the retailers.
Market participants have expressed concern that the balance sheet reduction, which Yellen once said would be “like watching paint dry,” has in fact contributed to tightening financial conditions. “I am very surprised on the focus [on the balance sheet selling off],” she said. “This is meant to be done in way that’s not disruptive. It was important Powell indicated it’s open for a re-think if it looks like it is a problem,” she said, but added, “I don’t see that evidence now.”
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