Finance

Yellen admits disappointment over exit in rare interview

Yellen admits disappointment over exit in rare interview

With the outset of the Powell era only days away, analysts do not expect a dramatic shift from the Fed on Wednesday. The Fed has a twin mandate to promote full employment while keeping a lid on inflation.

During Yellen's 4-year term, the Fed smoothly moved from an extraordinary stimulus policy to raising rates and starting a programme of winding down the balance sheet of the Central Bank.

In an interview on her last day, Yellen said for the first time publicly that she was disappointed that President Donald Trump did not nominate her for a second term. The only woman to serve as the head of the U.S. central bank described her work at the Fed as "the core of my existence".

"The thing she'll be mostly known for is steering the economy into a fabulous position", said Princeton economist and former Fed Vice Chairman Alan Blinder.

Yellen listened respectfully and stayed focused on the labor market, consulting a range of data beyond the headline unemployment rate, for subtle signs of remaining "slack".

"Yellen was more of a dove than Jay Powell, who is a little bit more hawkish", Goss said.

In hindsight, though, Yellen's approach has been vindicated: Simply put, you can't argue with success.




"Ultimately it's limited by productivity growth, which is weak", she said.

As perhaps her final act at the central bank, Yellen late Friday hit one of the largest USA banks, Wells Fargo & Co, with an unusual ban on growth that follows the San Francisco-based lender's pattern of consumer abuses and compliance lapses. "They are now expected to raise rates by three-quarters of a percent by the end of the year". The other is to manage interest rates to promote stable prices, which the Fed has defined as inflation averaging 2 per cent annually.

The question is what might happen when growth cools, which is bound to happen sooner or later, and quite possibly before the 2020 election.

Hundreds of Fed staffers gathered Thursday to celebrate Yellen's Fed tenure, welcoming her with prolonged applause when she appeared in the Fed's giant atrium, according to participants at the staff gathering.

It would not be in Trump's nature to accept responsibility for a souring economy, even if it reflected a crisis of his own making - a trade war, say, or a military clash with North Korea.

Name SearchWatch Service' Jerome Powell.


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