Janet Yellen aimed her long career at the Federal Reserve with concerns over how costly the stock market has surged under her watch.
The S&P 500 has soared 315 percent since the Walk 2009 bear market lows and about 53 percent since she took on top of as chair of the central bank in 2004.
Yellen said in an interview with CBS Newsflash that market valuations are the source of some concern as she headed into not for publication life following a 14-year Fed career, the last four as the chair. She talk to as the market finally took a breather from what has been a breathtaking action higher, with the Dow industrials falling 666 points Friday.
“Warmly, I don’t want to say too high. But I do want to say high,” she said. “Price/earnings correlations are near the high end of their historical ranges.”
In addition to elevated fair play prices, Yellen also said commercial real estate is “from head to toe high” compared with rents.
“Now, is that a bubble or is too high? And there it’s definitely hard to tell. But it is a source of some concern that asset valuations are so capital,” she said.
Fed critics say the central bank purposely pushed up the stock market-place in an effort to create a wealth effect that officials hoped transfer spill over into the broader economy. The Federal Open Demand Committee, the bank’s policymaking arm, took its key overnight interest rate quarry to near-zero in late-2008 and left it there for seven years.
In supplement, the Fed expanded its bond portfolio, also called its balance sheet, from nothing but shy of $800 billion at the end of 2007 to more than $4.5 trillion. Protection Yellen, the FOMC approved five quarter-point rate hikes and began a program to wither the balance sheet gradually.
Yellen told CBS that while she is involved about asset valuations, a drop — she did not specify by how much — “desire not unduly damage the core of our financial system.”
Yellen’s successor, Jerome Powell, was sworninMonday morning.
See the absorbed report on Yellen’s exit interview here.