NEW YORK (Reuters) - Federal Reserve Chair Janet Yellen stuck by her prediction that U.S. inflation will soon rebound but offered on Tuesday an unusually strong caveat: she is “very uncertain” about this and is open to the possibility that prices could remain low for years to come. FILE PHOTO: Federal Reserve Chairman Janet Yellen speaks during a news conference after a two-day Federal Open Markets Committee (FOMC) policy meeting, in Washington, U.S., September 20, 2017. REUTERS/Joshua Roberts/File PhotoA day after announcing her retirement from the U.S. central bank, planned for early February, Yellen said the Fed is nonetheless reasonably close to its goals and should continue to gradually raise interest rates to keep both inflation and unemployment from drifting too low. Yellen, one of the most powerful figures in world finance who also weighed in on the challenges women face in economics, said she does not believe that inflation expectations have drifted down too much despite five years of below-target U.S. price readings. Inflation should rebound over the next year or two, she said, adding: “I will say I am very uncertain about this. My colleagues and I are not certain that it is transitory, and we are monitoring inflation very closely.” A key lesson of her four-year tenure atop the Fed was to keep an open mind and not assume “you have a monopoly on truth,” Yellen told students and professors at NYU Stern School of Business. “It may be that there is something more endemic going on or long-lasting here that we need to pay attention to.” The Fed’s top policymakers have repeated their belief that inflation would rebound even while their preferred price measure has slipped to 1.3 percent, below a 2-percent target. Unemployment has fallen to 4.1 percent while overall economic growth is running strong at 3 percent, prompting high expectations for a rate hike next month despite the price weakness. Yellen noted that while undershooting the inflation target for too long “can be quite dangerous,” the Fed must also avoid driving unemployment “way below” sustainable levels. “We don’t want a boom-bust policy,” she said. The first woman to lead the Fed, Yellen is credited with putting the economy on a firmer footing and steering monetary policy away from the fire-fighting mode that followed the 2007-2009 recession and financial crisis. Yet she was overlooked when U.S. President Donald Trump earlier this month nominated Jerome Powell, a Fed governor, to become Fed chair in February - a decision that broke with tradition of chairs serving at least two terms. On Monday Yellen said she would resign her seat on the Fed’s Board of Governors once Powell is confirmed and sworn in. Yellen has pushed to improve recruiting and promotion of women and minorities at the Fed. Of the roughly 135 regional presidents in the Fed’s history, all but six have been men and all but three have been white. Asked about gender disparity in economics, Yellen stressed the importance for young people to have mentors who are “watching out for them... Especially for women in a field that has very few women.” The proportion of women among new economics PhDs has flatlined over the last decade, and has dropped among associate professors, while only 13 percent of professors are women in PhD-granting departments, according to the American Economic Association. Women tend to be less well-integrated in more casual, male social networks, making opportunities such as co-authoring research less accessible, Yellen said. “The way in which women are somewhat disadvantaged is that it’s often during social interactions that those conversations take place.”
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Updated Date: Nov 22, 2017 07:15 AM