Two quotes by Janet Yellen, only hours apart. The first clearly emphasizes the very real risk of rapidly rising inflation…
“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy.”
…while the other clearly walks back the earlier assertion.
“I don’t think there’s going to be an inflationary problem. But if there is, the Fed will be counted on to address them.”
The reason for the second comment, of course, was the market’s reaction to the first – a tantrum, if you will.
Most of us remember when, in 2013, Bernanke spooked the markets with talk of a rollback in bond purchases. Yellen did the same thing a few years later as Fed chair. This one is slightly different, as it highlights the facts which, by now, should be clear to everyone: inflation is a very real danger to the economy and the markets.
Yellen’s retraction won’t change that.
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