Good news, investors.

Former Federal Reserve Chair Janet Yellen said Monday at the National Retail Federation’s annual Big Show that the Fed is likely at the end of its rate-hiking cycle.

“If there is a downturn in the global economy and that spills into the U.S. … It’s very possible we may have seen the last interest rate hike of this cycle,” Yellen said.

If Yellen’s assessment proves accurate, her views fit the market’s thinking but is contrary to what current Fed officials have intimated, which is another two hikes for 2019. The Fed raised its benchmark interest rate for a fourth time in 2018 this past December.

The current rate cycle began when Yellen led the Fed in 2008.


“Perhaps another rate hike or two is perfectly possible, but nothing is baked in,” Yellen said during her comments to the retailers.

Yellen added that she expects the Fed to “take a breather [to] evaluate where the economy is” before it moves again.

Market pricing currently sees no chance of a rate hike in 2019 and in fact is pricing in a 28 percent chance of a quarter-point cut before the year comes to a close.

The Powell Fed initially had pointed to four increases this year but cut that to two in December. Since then, several members, including Powell himself, have indicated a less-aggressive approach, with the chairman saying the Fed can afford to be patient with how it approaches policy.

That includes not only with rate hikes but also with the Fed’s $4.1 trillion balance sheet, which consists mostly of a portfolio of Treasurys and mortgage-backed securities it purchased to stimulate the economy during and after the financial crisis. The Fed has been reducing the portfolio by allowing a capped maximum of $50 billion in proceeds from the bonds to roll off each month.

Market participants have expressed concern that the balance sheet reduction, which Yellen once said would be “like watching paint dry,” has in fact contributed to tightening financial conditions.

“”I am very surprised on the focus [on the balance sheet selling off],” she said. “This is meant to be done in way that’s not disruptive.”

“It was important Powell indicated it’s open for a re-think if it looks like it is a problem,” she said, but added, “I don’t see that evidence now.”