The Federal Reserve already could be at the end of its rate-hiking cycle, former Fed Chair Janet Yellen said Monday.
"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," she said at the National Retail Federation's annual Big Show event in New York.
If Yellen is accurate, her views would fit into the market's thinking but would be contrary to expectations from central bank officials themselves.
According to the most recent projections from individual members of the policymaking Federal Open Market Committee, there are two rate hikes likely this year and perhaps one more after that. Those expectations come after a 2018 during which the Fed hiked its benchmark rate four times to a target range of 2.25 percent to 2.5 percent.
The Yellen Fed began the current rate cycle, hiking the benchmark federal funds rate once in 2015, again in 2016 and then three more times in 2017. President Donald Trump opted not to nominate her for another term, and the current chairman, Jerome Powell, took over in February 2018.
"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."
Yellen also spoke Monday on how an ongoing partial government shutdown could lead to "disruption" in the retail industry.