WASHINGTON–Even though she knows from her previous role of the power of words, the country’s still new Treasury secretary got a reminder of the effect even one comment on interest rates can have on markets.
Janet Yellen
Treasury Secretary Janet Yellen, who previously served as Federal Reserve chair, ratted the markets when during one event she made a comment that she then had to revise during remarks to a second event later on the same day.
“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,” Yellen said at the first event, hosted by The Atlantic.
The New York Times noted investors “seized on those words,” with tech stocks among those tumbling at the prospect of higher rates and critics claiming she was improperly interfering in monetary policy.
The Times noted, and as CUToday.info has reported, Fed officials have said that any spike in inflation linked to robust government spending and a post-pandemic reopening is likely to be temporary; the central bank has pledged to keep interest rates low for a long time.”
Clarification Made
The mini-dustup from the first meeting led to a clarification at the second event.
“Let me be clear, it’s not something I’m predicting or recommending,”Yellen said at the second event, hosted by The Wall Street Journal, a few hours later. “If anybody appreciates the independence of the Fed, I think that person is me.”
The follow-up comments led to stocks paring their losses.