Outgoing Federal Reserve Chair Janet Yellen is holding a press conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, USA, on December 13, 2017.
Jonathan Ernst | Reuters
Treasury Secretary Janet Yellen told CNBC on Thursday that there could be parts of the U.S. stock market in which investors should be cautious.
In an interview with Closing Bell, Yellen said he believes higher capital valuations can be understood given the Federal Reserve’s accommodative monetary policy.
“Well, we’re partly in a very low interest rate environment,” Yellen said. “And while valuations are very high, in a world of very low interest rates, price gains and tight multiples tend to be high. That said, you know, they can be sectors … where we should be. be very careful, ”added Yellen, who took over as head of the Treasury in late January under President Joe Biden.
The comments answered a question from CNBC’s Sara Eisen, who asked if Yellen believed it made sense for major U.S. stock market indices to be trading near record highs during the coronavirus pandemic and its related economic damage. He also asked about the large share movements in the initial public offerings and the SPACs.
Yellen did not specify which sectors he was referring to.
Bitcoin has also experienced a big move in recent months and the world’s most valuable cryptocurrency topped $ 52,000 for the first time on Wednesday.
Yellen said he considers bitcoin to be a “highly speculative asset” and noted that high levels of volatility have been seen in recent years. Asked if she believes it needs to be regulated, Yellen said any action should consist of protecting investors.
“I think it’s important to make sure it’s not used as a vehicle for transactions and that there is protection for investors,” said Yellen, a former Fed chairman. “And therefore regulating the institutions that deal with Bitcoin, making sure they meet their regulatory responsibilities, I think is certainly important.”
Lately, cryptocurrencies have experienced a greater adoption lately of established financial companies. Mastercard said last week that it intends to support certain cryptocurrencies in its formal network, while BNY Mellon, the country’s oldest bank, will launch a digital asset unit later this year.