Yellen Pooh-Poohs Rate Cut As Stocks Swoon

(RTTNews) - Federal Reserve Chair Janet Yellen on Thursday downplayed the possibility the central bank might soon cut interest rates in a reversal of December's long-awaited tightening.

"I have not thought that a downturn sufficient to cause the next move to be a cut was a likely possibility," Yellen told the Senate Finance Committee in her second day of Congressional testimony.

Heavy recent losses in the stock market are not the result of the Fed's December rate hike, the first in a decade.

Because the Fed reduced accommodation only "by a modest amount," it was "not mainly our policy" that prompted the January swoon.

In fact, markets were very calm in the weeks immediately after the Fed rate hike.

For now, the Fed will take a wait-and-see approach before announcing further policy changes.

Yellen said the Fed is looking into negative rates, but made no promises that such measures would be taken even if the economy takes a turn for the worse.

"In light of the experience of European countries and others that have gone to negative rates, we're taking a look at them again, because we would want to be prepared in the event that we would need (to increase) accommodation. We haven't finished that evaluation. We need to consider the institutional context and whether they would work well here. It's not automatic," she said.