Janet Yellen Keeps Fed Cut Hopes Alive As Iran War Roils Markets— ‘If I Had To Write One Thing Down…’

by | Apr 15, 2026 | General

Former U.S. Treasury Secretary Janet Yellen said she still sees the possibility of one Federal Reserve rate cut later this year, even as the Iran war fuels an oil-driven inflation shock that is complicating the central bank’s outlook.

Speaking at the HSBC Global Investment Summit in Hong Kong on Wednesday, Yellen said the Fed remains open-minded despite rising near-term inflation expectations.

“If I had to write one thing down on a piece of paper… I suppose my guess would be that maybe there would be a cut later in the year,” Yellen said, as reported by Reuters.

Oil Shock Clouds Inflation Outlook

Yellen warned that the over six-week Iran conflict was creating a broad supply shock across the global economy.

“This is really a broad supply shock,” she said, citing the impact on gasoline, LNG, fertilizers, food, shipping costs and semiconductors.

Crude prices have surged more than 30% since the conflict began, while U.S. consumer prices rose in March by the most in nearly four years, driven in part by higher fuel costs.

While Yellen said the Fed may need to consider tighter policy if inflation worsens, she said stable long-term inflation expectations make that outcome less likely for now.

Fed policymakers held rates steady in March at 3.50% to 3.75%, while signaling one potential cut this year.


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Warns Of Political Pressure On Fed

Yellen also voiced concern about mounting political pressure on the central bank from President Donald Trump.

Trump has repeatedly criticized Fed Chair Jerome Powell for not cutting rates more aggressively and has backed Kevin Warsh as his preferred successor.

“I have never seen a threat of this level to the Fed before,” said Yellen, who chaired the central bank from 2014 to 2018. She added that Trump’s aggressive campaign for lower interest rates in order to reduce the cost of U.S. debt is the rhetoric of a “banana republic.”

Yellen also said that she does not want to see the U.S. and China decouple economically, saying both nations benefit from preserving trade and investment ties.

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