Outgoing Federal Reserve chief Janet Yellen said Friday she did not believe the major gains on Wall Street in recent months qualified as a “bubble,” but nevertheless warned investors to remain cautious.
Yellen, who leaves her post on Saturday and will be replaced on Monday by Jerome Powell, made the comments in an interview with PBS television before the Dow closed down more than 650 points, its biggest drop since June 2016.
“I don’t want to label what we’re seeing as a bubble, but I would say that assets valuations generally are elevated,” Yellen said, advising investors to “be careful to diversify in their investments.”
The US stock market has gained more than 30 percent since President Donald Trump took office a year ago, but on Friday, fears about rising interest rates following better-than-expected January jobs data led to the major dip on Wall Street.
When asked about the state of the US economy, Yellen said that “things are looking really strong,” and highlighted the job market, “with wages beginning to rise at a slightly faster pace.”
The US economy added 200,000 jobs in January, with unemployment holding at 4.1 percent -- its lowest level in more than 17 years.
When asked about Trump’s decision not to renew her for a second four-year term at the Federal Reserve, the 71-year-old Yellen admitted she was “disappointed.”
“I would have liked to serve an additional term and I did make that clear,” she said, in her first comments on the matter.
Named in 2014 by Trump’s predecessor Barack Obama to lead the Fed, Yellen was the first woman to head the US central bank. Powell, a Republican former investment banker, will be one of the rare non-economists to fill the role.