Highlights from the prepared text of Yellen's testimony
- Additional gradual hikes needed in next few years
- Current path of economy expected to warrant further gradual increase in the Fed funds rate
- Fed likely to implement balance sheet reduction plan 'this year'
- Fed doesn't need to hike 'all that much further' to hit neutral
- Economy picked up in Q2, aided by household spending, business investment and stronger global economy
- Carefully monitoring inflation but believes recent dip is due to 'a few unusual' price declines in certain items
- Sees 'roughly equal odds' of faster or slower growth than current forecasts\
- Full text
There isn't much to takeaway here that we didn't hear after the most-recent FOMC. One thing that stands out is the balance sheet runoff starting 'this year' because the Fed has never been that explicit before. That said, it's expected.
One thing that's missing is any kind of a sign of urgency on hiking rates or even a hint about a hike late this year.
The US dollar is lower on the headlines.