Former US Treasury Secretary Janet Yellen announced that the fallout from the war with Iran and its potential impact on the oil market will hinder economic growth and increase inflationary pressures, greatly complicating the Fed’s mission.
Yellen, the former Fed chair, joined a conference hosted by S&P Global via video today and explained that the current situation has made central banks more reluctant to lower interest rates than they were before the crisis.
It warned that if the Strait of Hormuz remains closed for more than a few days, prices could remain high or even push them higher.
psychology of inflation
He noted that the Fed fears that inflationary sentiment will take hold among market participants.
He reported that officials were concerned that this could lead to a loss of confidence in achieving the 2% target, leading to the acceptance of persistently high levels of inflation.
Despite these risks, Yellen expressed optimism about the overall state of the U.S. economy, saying it remains healthy.
Former US Treasury Secretary Janet Yellen announced that the fallout from the war with Iran and its potential impact on the oil market would hamper economic growth, increase inflationary pressures and significantly complicate the Federal Reserve’s mission.
Yellen, the former Fed chair, joined a conference hosted by S&P Global by video today and explained that the current situation allows the central bank to lower interest rates more consistently than before the crisis.
He warned that if the Strait of Hormuz closure lasts for more than a few days, it could lead to prices remaining high or pushing them to even higher levels.
psychology of inflation
He suggested that the Fed is concerned about psychological inflation taking hold among market participants.
He said officials were concerned that they could lose confidence in achieving the 2% target, leading to continued high levels of inflation.
Despite these risks, Yellen expressed optimism about the overall state of the U.S. economy, saying the U.S. economy remains in good shape.
