The Federal Reserve's next move may well be an interest rate cut if weakening growth around the world starts infecting the U.S. economy, former central bank Chair Janet Yellen said Wednesday.
Weakening economies in China and Europe are posing danger to an otherwise strong U.S. economy, Yellen told CNBC's Steve Liesman during a "Power Lunch" interview.
"Of course it's possible. If global growth really weakens and that spills over to the United States where financial conditions tighten more and we do see a weakening in the U.S. economy, it's certainly possible that the next move is a cut," she said. "But both outcomes are possible."
The former central bank head cited "slowing global growth" as the biggest threat to the economy she once watched over.
"The data from China has been recently weak, the European data has also come in weaker than expected," she said.
Yellen took the Fed's reins from former Chairman Ben Bernake after the two helped engineer the economy out of its worst downturn since the Great Depression.
Central to their approach was taking the central bank's benchmark interest rate to near zero and instituting three rounds of bond buying aimed at lowering long-term interest rates and bringing liquidity back to the economy and markets. The program resulted in a balance sheet in excess of $4.5 trillion.
Before she left, the Yellen Fed began raising rates for the first time in a decade after holding to zero rates for seven years.
