Yellen: Fed cut still possible this year
U.S. Treasury Secretary Janet Yellen said a Federal Reserve rate cut this year remains possible despite oil-related shocks, though she acknowledged geopolitical risk clouds the outlook. That comment feeds into the North American policy debate about timing and conditionality of rate easing. (bloomberg.com)
Janet Yellen said on April 15 that the Federal Reserve could still cut interest rates in 2026, even after an oil shock tied to the war in Iran. (bloomberg.com) Speaking at the HSBC Global Investment Summit in Hong Kong, Yellen said she still sees room for one cut this year, while warning that the conflict is creating supply shocks that can push inflation higher. (bloomberg.com) (reuters.com) A rate cut lowers the Federal Reserve’s benchmark borrowing cost, which can ease pressure on mortgages, credit, and business loans if inflation is moving back toward the central bank’s 2 percent goal. (federalreserve.gov 1) (federalreserve.gov 2) The Federal Reserve left rates unchanged at its March 17-18 meeting, saying economic activity was still expanding, job gains had remained low, unemployment had changed little, and inflation was still “somewhat elevated.” (federalreserve.gov) Chair Jerome Powell said after that meeting that officials were watching labor-market data, inflation pressures, inflation expectations, and international developments when judging the next move. (federalreserve.gov 1) (federalreserve.gov 2) That leaves oil at the center of the debate. A jump in energy prices can lift gasoline and shipping costs quickly, and those increases can slow the drop in consumer-price inflation even if demand elsewhere is cooling. (reuters.com) (federalreserve.gov) Yellen’s comments also carry unusual weight because she led both institutions at different times: the Federal Reserve from 2014 to 2018 and the Treasury Department from 2021 to 2025. (treasury.gov) (federalreserve.gov) The Federal Open Market Committee has six scheduled meetings left in 2026 after March, with the next one set for May 5-6. That gives policymakers several chances to see whether oil-driven inflation fades or spreads into broader prices. (federalreserve.gov) For now, Yellen’s message was narrower than a forecast of imminent easing: one cut is still possible, but only if the inflation hit from energy does not knock the Federal Reserve off its path. (bloomberg.com) (reuters.com)
