Yellen on Monetary Policy, Future of Fed

Janet Yellen, the former Chair of the Federal Reserve, spoke in Lohrfink Auditorium on April 14 as a part of the annual Tanous Family Endowed Lecture Series.

In her lecture titled “The Past, Present, and Future of the Federal Reserve,” Yellen detailed both her history with the institution and her hopes and concerns for its future policies.

Yellen, who served as Fed Chair between 2014 and 2018, was the first woman to hold the position and the first Democratic nominee to the Fed since 1979. She spoke about her experience overseeing the central bank’s monetary policy following the aftermath of the 2008 recession and the implementation of financial regulation through the Dodd Frank Act.

“I sought to craft monetary policy that would foster continued economic recovery … and to do everything possible to make the financial system safer,” Yellen said.

As Chair, she oversaw the dual mandate of the Fed to promote maximum employment and price stability in the economy. Under her tenure, the unemployment rate fell to from 5.8% to 4.6%.

Yellen also offered suggestions for new strategies to address the current challenge of increasing inflation to 2%—the target rate for a healthy, growing economy—through adjusting the Fed’s inflation target during economic expansions.

“Inflation expectations are an important driver of inflation itself,” said Yellen. “If inflation expectations slip, that can put the actual attainment of [that objective] at risk.”

Yellen shied from directly addressing political controversies related to the current administration. When questioned on President Trump’s controversial nomination of Herman Cain to the Fed Board, she emphasized the importance of the “fact-based and nonpolitical” nature of the Fed.

Yellen is currently a Distinguished Fellow in Residence at the Brookings Institution.