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

Former Federal Reserve Chairwoman Janet YellenJanet Louise YellenWhat economic recession? Think of this economy as an elderly friend: Old age means coming death On The Money: Rising recession fears pose risk for Trump | Stocks suffer worst losses of 2019 | Trump blames 'clueless' Fed for economic worries 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.