Premarket shares: Janet Yellen simply proved markets cannot deal with the reality

Warren Buffett, CEO of Berkshire Hathaway, attends the 2019 annual shareholders meeting in Omaha, Nebraska, May 3, 2019. (Photo by Johannes EISELE / AFP)        (Photo credit should read JOHANNES EISELE/AFP via Getty Images)


The details: At an event hosted by The Atlantic, Yellen, an economist who previously led the Federal Reserve, indicated that the central bank may need to hike interest rates to prevent prices from rising too quickly.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,” Yellen said.

Her comments rippled through markets, feeding a selloff in tech stocks that could take a beating when rates rise. She later clarified that she wasn’t predicting or making any recommendations to the Fed, whose independence she respects, and does not expect inflation to be a persistent, major issue.

“I don’t think there’s going to be an inflationary problem, but if there is, the Fed can be counted on to address [it],” Yellen said later Tuesday at The Wall Street Journal’s CEO Council Summit.

Step back: The content of what Yellen said wasn’t revolutionary. The US economy is on track to stage a full recovery from the pandemic this year as demand bounces back…