Federal Reserve Chair Janet Yellen said inflation should pick back up to the Fed's 2% target in the next year or two, but she is "very uncertain" about that forecast.
Yellen, speaking to an audience in New York a day after announcing her upcoming resignation, made the remarks in response to a question about why inflation remains below that target even though the U.S. unemployment rate is continuing to hit new lows.
She added that it is always important to keep an open mind and to realize that the usual patterns of economics will not always repeat themselves.
"It may be that there is something more endemic or long-lasting here that we need to pay attention to," she said during an appearance at New York University.
Yellen said the Fed is now "reasonably close" to meeting its dual mandate of keeping unemployment low and prices stable, noting that the Fed is taking a careful approach toward raising the federal funds rate after slashing it to near zero percent during the financial crisis.
The U.S., she added, has also added a wide range of protections that will help ensure the financial system is "more resilient to shocks and less crisis-prone," such as stress-testing, higher capital requirements for banks, and improvements on how the largest institutions manage risks.
"I really think it's important that those things stay in place so we have a sound and resilient financial system," she said.
Yellen, the Fed's first female chair, also reflected on her career and on a lack of opportunities that women and minorities face in entering the economics profession. She said, for instance, that female economists can be excluded from social opportunities where men discuss ideas over drinks to co-author papers.
She also said clear communication — both to the public and within the Fed — has been essential during her tenure. She listed as an example the Fed's recent efforts to begin trimming the roughly $4.5 trillion balance sheet that accumulated after the financial crisis.
Discussions to begin gradually letting those assets roll off the Fed's balance sheet, she said, took "well over a year" and required her to get consensus from Federal Open Market Committee members before publicly unveiling the plan.
And she gave a tip to Fed observers who read the transcripts from the committee's meetings: searching for the word "laughter" in those transcripts to find the jokes members make during meetings viewed as overly formal.
"I'm not going to vouch for the quality of the jokes," she said. "But there are jokes."