Fed's Yellen says there is a 'chance' of a recession

Federal Reserve chair Janet Yellen on Thursday said there was a “chance” of a recession as financial conditions worsen abroad.

Speaking to the Senate Banking Committee, Yellen said that the global selloff could impact growth in the US economy.

"There is always some chance of recession in any year," she said. "But the evidence suggests that expansions don't die of old age."

Her remarks somewhat mirrored comments on Wednesday to the House Financial Services Committee that financial conditions have become less supportive of economic growth, the slowdown in China could weigh further on the US and the outlook for inflation is falling.

In her latest testimony she repeated that the Fed considered negative interest rates in 2010 but had decided it was not the best action to take at the time. Yellen left the door open to negative rates in the future.

"In light of the experience of European countries and others that have gone to negative rates, we're taking a look at them again, because we would want to be prepared in the event that we would need (to increase) accommodation. We haven't finished that evaluation. We need to consider the institutional context and whether they would work well here. It's not automatic," she said.

The central bank chair again highlighted that falling oil prices had hurt the outlook on inflation, which remains well below the Fed's 2% target.

The yield on the 10-year bond fell to its lowest level in more than three years in early US trade. Equities in the US, Europe and Asia were also in the red.