(Bloomberg) — Former Federal Reserve Chair Janet Yellen defended the rate increases executed during her term as head of the U.S. central bank, saying they were not enough to derail the expansion then underway.
“We saw ourselves as having our foot firmly on the gas pedal,” and raising rates represented easing up a bit, Yellen said during an online panel Tuesday hosted by the Brookings Institution. “It was by no means the case that we slammed on the brakes.”
The Fed began raising interest rates off zero in December 2015 when unemployment stood at 5.1% and year-on-year inflation was just 0.3%. When she left office in 2018, the federal funds rate sat in a range of 1.25% to 1.5%.
The Fed last week unveiled a new monetary policy strategy that will take a more relaxed approach toward inflation, which has long run below their 2% target, and allow unemployment to run lower than they previously tolerated.
Shortly before the panel, Fed Governor Lael Brainard said the new framework, had it been in place in 2015 and subsequent years, would have altered the institution’s policy.
The new strategy “would have changed deliberations earlier had all of these factors been well understood,” Brainard said.
Yellen pushed back against that conclusion. “It would have made a small difference,” she said.
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