Yellen sees no recession in sight, says rate cut may be needed

Former Federal Reserve Chairwoman Janet YellenJanet Louise YellenSenate needs to stand up to Trump's Nixonian view of the Fed The Hill's 12:30 Report: Washington braces for Mueller report Trump struggles to reshape Fed MORE said on Monday that she does not foresee a recession based on recent moves in the bond market, and that the markets may be indicating the need for an interest rate cut.
 
"I don't see it as a signal of recession," Yellen told a Credit Suisse conference in Hong Kong when asked about the yield curve inverting. An inverted yield curve is often a leading indicator ahead of a recession, with long-term yield rates falling below short-term ones.
 
Yield curves, she added, tend to be more flat than they were in the past, so an inversion may not carry the same significance it once did.
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"Yes, growth is slowing, but I don’t see it slowing to a level that will cause a recession," she said. "In fact, it might signal that the Fed would at some point need to cut rates, but it certainly doesn’t signal that this is a set of developments that would necessarily cause a recession."
 
Yellen's successor at the Fed, Jerome Powell, raised interest rates four times last year, but seemed to change tack last week by indicating that rates would remain stable for the year.