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Home / Business / Ex-head of manager Janet Yellen says she is in favor of a cut in interest rates

Ex-head of manager Janet Yellen says she is in favor of a cut in interest rates



Janet Yellen

Scott Mlyn CNBC

The United States is not an island. We are part of the global economy. What happens in the rest of the world – in Europe, in Asia – affects the United States.

Janet Yellen

Former Federal Reserve Chair

US inflation is also low ̵

1; too low, according to Yellen.

"The United States is not an island," she added. "We are part of the global economy. What is happening in the rest of the world – in Europe, Asia – affects the United States. And it is also true that US monetary policy is affecting global conditions."

Yellen led the Fed for a four-year term ending February 3, 2018. During her employment period, the Fed raised its rate in December 2015 for the first time in nearly a decade. It was the start of an attempt to return interest rates to a point where political decision makers could have some leeway to reduce them again in the face of any future downturn.

Wednesday's expected interest rate cuts are seen as a preventive measure in the midst of growing concerns about the global growth outlook and the impact of the ongoing trade war between Beijing and Washington.

The central bank has said it is concerned about slowing global growth, the possible impact of trade warfare and low inflation. It has also said it will act to expand the economic expansion, if necessary.

Yellen explained that the country's focus should be to maintain the conditions of a strong US economy that can stay on an expansion road.

"I believe in light of the risk I will tend to cut a little," she said, referring to the Fed's reference rate. "I didn't want to see this as the beginning, unless things change, from a major relief cycle. But I think it's appropriate."

– CNBCs Patti Domm contributed to this report.


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