Yellen: Fed rate cut is a "positive sign," policy still remains restrictive
US Treasury Secretary Yellen pointed out that Federal Reserve officials predict that rate cuts will continue until 2026, the current labor market is normal and healthy, and the existing policy path is feasible
On Thursday, September 19th, former Federal Reserve Chair and current Treasury Secretary Yellen made a statement after the Fed announced a 50 basis point rate cut.
Speaking at an event hosted by The Atlantic, Yellen stated that the Fed's rate cut on Wednesday was a "very positive signal" for the U.S. economy, reflecting the Fed's progress in reducing inflation and its determination to protect the job market.
Yellen said:
"The Fed's 50 basis point rate cut indicates their confidence that inflation has significantly decreased and is gradually returning to their 2% target inflation level, as well as the substantial reduction in inflation-related risks."
She emphasized that the Fed's primary task now is to ensure that the job market "remains strong." Yellen also noted that the Fed is still pursuing a tight monetary policy, but expects rates to further decline. Fed officials' projections suggest that rates could continue to fall until 2026. However, Yellen also warned that close attention should still be paid to future economic data to respond to any unexpected developments.
Yellen also pointed out that while the current job market is not as overheated as it was in 2022 or 2023 when employers were struggling to find labor, it is still in a "normal, healthy" state. If the economic conditions continue to develop along this trend, the current policy path can be maintained unchanged