Yellen: "U.S. Still Likely to Cut Rates This Year"

by Ryu Hyunseok

Published 15 Apr.2026 16:00(KST)

Janet Yellen, who previously served as U.S. Treasury Secretary and Chair of the Federal Reserve (Fed), stated that the U.S. may still lower interest rates despite the Iran war.

Reuters Yonhap News

Speaking at the HSBC Global Investment Summit in Hong Kong, Yellen said, "There is a possibility of a rate cut later this year," and added, "While several scenarios are possible, this remains the most likely base case."

She further explained that the likelihood of an interest rate hike due to the Iran war is low. She noted that the impact of the conflict is spreading from gasoline prices to liquefied natural gas (LNG), fertilizers, food, transportation costs, and semiconductors. While she did not rule out the possibility that a rate hike could become necessary, she emphasized that such a scenario is currently unlikely given that long-term inflation expectations remain stable.

According to the minutes of the Federal Open Market Committee (FOMC) regular meeting in March, released by the Fed, participants believed that the rise in energy prices caused by the Iran war could spur future price trends. They also slightly raised their inflation outlook compared to January and assessed that upside risks had increased. This was attributed to greater economic uncertainty stemming from the Middle East conflict, changes in government policy, and the spread of artificial intelligence (AI).

Most participants maintained the view that a rate cut would be appropriate in the long term if prices fall as expected. However, reflecting recent inflation data, some argued that the timing of the rate cut should be delayed. A few participants also considered it appropriate to raise the target range for the policy rate if inflation remains above target for a sustained period. In the published dot plot, participants projected just one rate cut this year, the same as in the December 2023 outlook.

Yellen also reiterated concerns about the independence of the Fed. She warned that U.S. President Donald Trump's calls for rate cuts could undermine America's credibility. She said, "How often does the president of a developed country with a reserve currency say that interest rates should be set to lower the federal government's interest payments on debt?" She criticized such remarks, saying, "That kind of talk is something you would expect to hear in a banana republic."

Additionally, regarding Kevin Warsh, who worked with her at the Fed and is known as an "inflation hawk," she noted that there is a possibility he could clash with the president.