- Her prepared remarks finished with, Janet Yellen is taking questions at her semiannual congressional testimony. Live on C-SPAN.
- The FOMC, she says, is "well aware" that inflation has been running below its 2% target for years, and the dangers inherent in that. Labor markets continue to strengthen, though, and that should put upward pressure on prices. It would be "premature" to conclude that we're not on the path to 2%.
- As to whether the Fed might consider lifting its 2% inflation target, that's not under discussion, says Yellen.
- Balance-sheet normalization: "Should begin this year ... relatively soon."
- In addition to the "uncertainty" over higher inflation, traders are focusing on another opening statement line in which Yellen said the Fed Funds rate doesn't have much farther to go before reaching a neutral policy stance.
- Bonds continue higher, with the 10-year yield down 5 basis points to 2.31%. TLT +0.7%, TBT -1.4%
- Gold is up 0.6% to $1,222 per ounce.
- The S&P 500 is ahead 0.6%.
- Now read: Why Central Banks Will Send The Dollar Lower In The Coming Months
Original article