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As Her Last Day With the Fed Nears, Janet Yellen Looks Back on Her First As Her Last Day With the Fed Nears, Janet Yellen Looks Back on Her First
(about 20 hours later)
Janet Yellen, the Federal Reserve chairwoman, made a relaxed appearance at New York University on Tuesday night, answering questions about her life in economics and her time at the Fed one day after she announced plans to leave the central bank next year.Janet Yellen, the Federal Reserve chairwoman, made a relaxed appearance at New York University on Tuesday night, answering questions about her life in economics and her time at the Fed one day after she announced plans to leave the central bank next year.
Ms. Yellen said nothing new about the Fed’s policy plans for the coming months, leaving unaltered the widespread expectation that the Fed will raise its benchmark interest rate in mid-December.Ms. Yellen said nothing new about the Fed’s policy plans for the coming months, leaving unaltered the widespread expectation that the Fed will raise its benchmark interest rate in mid-December.
Instead, Ms. Yellen entertained the audience with her description of her first day at the Fed almost four years ago, and a firsthand report on the typical topics of conversation at her dinner table.Instead, Ms. Yellen entertained the audience with her description of her first day at the Fed almost four years ago, and a firsthand report on the typical topics of conversation at her dinner table.
“We do have a heavier dose of economics in our diet than some might find appetizing,” she said.“We do have a heavier dose of economics in our diet than some might find appetizing,” she said.
Ms. Yellen announced Monday in a letter to President Trump that she would step down from the Fed’s board at the same time she ends her term as Fed chairwoman in early February.Ms. Yellen announced Monday in a letter to President Trump that she would step down from the Fed’s board at the same time she ends her term as Fed chairwoman in early February.
Mr. Trump has nominated Jerome H. Powell to succeed Ms. Yellen as the Fed’s chairman.Mr. Trump has nominated Jerome H. Powell to succeed Ms. Yellen as the Fed’s chairman.
On Tuesday, Ms. Yellen kept a longstanding engagement to be interviewed on a stage at the Stern School of Business by Mervyn King, the former governor of the Bank of England.On Tuesday, Ms. Yellen kept a longstanding engagement to be interviewed on a stage at the Stern School of Business by Mervyn King, the former governor of the Bank of England.
In one of her final public appearances as the Fed’s chairwoman, Ms. Yellen answered questions about policy in her trademark clear and steady style that has eliminated much of the guesswork that was once required to divine the Fed’s intentions.In one of her final public appearances as the Fed’s chairwoman, Ms. Yellen answered questions about policy in her trademark clear and steady style that has eliminated much of the guesswork that was once required to divine the Fed’s intentions.
She said the Fed was still inclined to raise interest rates gradually as it sought to balance the risks of moving too fast and moving too slow. The Fed is widely expected to raise its benchmark rate by a quarter of a percentage point at its final policy meeting of the year in mid-December. The rate now sits in a range of 1 percent to 1.25 percent. She said the Fed was still inclined to raise interest rates gradually as it sought to balance the risks of moving too fast and moving too slowly. The Fed is widely expected to raise its benchmark rate by a quarter of a percentage point at its final policy meeting of the year in mid-December. The rate now sits in a range of 1 percent to 1.25 percent.
Ms. Yellen noted the unemployment rate had fallen to 4.1 percent as of October, which the Fed regards as a little lower than the minimum level that can be sustained without spurring inflation.Ms. Yellen noted the unemployment rate had fallen to 4.1 percent as of October, which the Fed regards as a little lower than the minimum level that can be sustained without spurring inflation.
Some Fed officials also want to raise rates to discourage speculation in financial markets, and to increase the Fed’s ability to respond to economic downturns.Some Fed officials also want to raise rates to discourage speculation in financial markets, and to increase the Fed’s ability to respond to economic downturns.
On the other hand, the Fed sees little reason to rush. The economy is not overheating, inflation is below 2 percent, and the Fed does not want to stall growth.On the other hand, the Fed sees little reason to rush. The economy is not overheating, inflation is below 2 percent, and the Fed does not want to stall growth.
As she approaches her last day at the Fed, Ms. Yellen recalled her first: Feb. 3, 2014. She described a small swearing-in ceremony — a larger public event was held a few weeks later — followed by a quick turn to work, beginning with recording a video message to her staff.As she approaches her last day at the Fed, Ms. Yellen recalled her first: Feb. 3, 2014. She described a small swearing-in ceremony — a larger public event was held a few weeks later — followed by a quick turn to work, beginning with recording a video message to her staff.
Mr. King asked whether she paused for a little Champagne. Ms. Yellen laughed and responded, “Well, it’s a work day after all, Mervyn. We saved that for a family treat in the evening.”Mr. King asked whether she paused for a little Champagne. Ms. Yellen laughed and responded, “Well, it’s a work day after all, Mervyn. We saved that for a family treat in the evening.”
She said working at the Fed had been a “total pleasure.”She said working at the Fed had been a “total pleasure.”
Ms. Yellen’s tenure has been defined by her campaign to reduce unemployment. “I’m very interested in the job market, and a lot of my career has been spent studying unemployment and trying to understand how we can lower it,” she said.Ms. Yellen’s tenure has been defined by her campaign to reduce unemployment. “I’m very interested in the job market, and a lot of my career has been spent studying unemployment and trying to understand how we can lower it,” she said.
Mr. King also noted that the Fed under Ms. Yellen had continued an evolution toward greater transparency. Central banks once adhered to a philosophy that Mr. King described as “keep the press out of the bank and keep the bank out of the press.”Mr. King also noted that the Fed under Ms. Yellen had continued an evolution toward greater transparency. Central banks once adhered to a philosophy that Mr. King described as “keep the press out of the bank and keep the bank out of the press.”
But in recent decades, banks have adopted the opposite view. It is now conventional wisdom that effective policy requires management of public expectations.But in recent decades, banks have adopted the opposite view. It is now conventional wisdom that effective policy requires management of public expectations.
Ms. Yellen said communication had been a central element of her job: explaining the Fed to lay audiences, defending its policies before Congress, calibrating expectations in financial markets.Ms. Yellen said communication had been a central element of her job: explaining the Fed to lay audiences, defending its policies before Congress, calibrating expectations in financial markets.
Much of the conversation was lighthearted. Mr. King, noting that Ms. Yellen is married to an economist and that her son is also an economist, asked what she did to get away from economics.Much of the conversation was lighthearted. Mr. King, noting that Ms. Yellen is married to an economist and that her son is also an economist, asked what she did to get away from economics.
Ms. Yellen responded, “Now, why would you want to do that?”Ms. Yellen responded, “Now, why would you want to do that?”
She said that her family not only discussed economics at the dinner table, they also sometimes carried the conversations — and academic papers — to the beach.She said that her family not only discussed economics at the dinner table, they also sometimes carried the conversations — and academic papers — to the beach.
Ms. Yellen’s husband, George Akerlof, was a co-author on some of her early work, and she said that he had continued to play an important role in her career by supporting her turn toward public policy. “When I’ve been offered jobs in Washington, for example, his attitude has been, ‘You want to do that? Absolutely we’re going to make it work,’” she said.Ms. Yellen’s husband, George Akerlof, was a co-author on some of her early work, and she said that he had continued to play an important role in her career by supporting her turn toward public policy. “When I’ve been offered jobs in Washington, for example, his attitude has been, ‘You want to do that? Absolutely we’re going to make it work,’” she said.
Mr. Akerlof did not get the nod as the economist who has most influenced Ms. Yellen. Instead she named her mentor, James Tobin, a Yale University economist and a leading Keynesian theorist.Mr. Akerlof did not get the nod as the economist who has most influenced Ms. Yellen. Instead she named her mentor, James Tobin, a Yale University economist and a leading Keynesian theorist.
Ms. Yellen did, however, name Mr. Akerlof as the most interesting person she had ever met.Ms. Yellen did, however, name Mr. Akerlof as the most interesting person she had ever met.