FLASHBACK: Yellen Says Biggest Risk to Economy Is Inflation Being ‘Too Low’

‘The predominant risk is that inflation will be too low not too high over the next several years’

Speaking at the Commonwealth Club of California in San Francisco in 2009, then-president of the Federal Reserve Bank of San Francisco, argued the most likely outcome of the recession is deflation, not inflation. 

“Now though all I hear about is the danger of an outbreak of high inflation. So I am going to put my cards on the table right away," Yellen said. "I think the predominant risk is that inflation will be too low not too high over the next several years. I take 2 percent as a reasonable benchmark for the rate of inflation that’s most compatible with the Fed’s dual mandate of price stability and maximum employment. And that’s also the figure that a majority of FOMC members cited as their long-run forecast for inflation according to the minutes of the committee’s April meeting."

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