Yields, Dollar Fall As Yellen Seen Timid

Yellen’s prepared comments to be delivered later this morning on Capitol Hill are out.

Now, who’s excited?!

This is always funny because there’s so much build up and then, when the news actually hits, it suddenly dawns on everyone that we’re talking about an old ass economist talking about rates and inflation in front of a bunch of lawmakers who don’t understand or care about any of it.

Anyway, below are the highlights from the woman who will probably be replaced by a Goldman banker.

Do note the bolded bits (that’s why I bolded them). It kinda seems dovish and it looks like the market is taking it that way:

Via Bloomberg

U.S. labor market has continued to strengthen, gauges of slack fallen close to pre-recession levels, economy grown at moderate pace this year, Federal Reserve Chair Janet Yellen says in congressional testimony.

• On inflation, “it appears that the recent lower readings on inflation are partly the result of a few unusual reductions in certain categories of prices,” she says in prepared remarks to the House Financial Services Committee
• She and the FOMC expect “the economy will continue to expand at a moderate pace over the next couple of years, with the job market strengthening somewhat further and inflation rising to 2 percent”
• Domestic and foreign economic growth “should increase resource utilization somewhat further, thereby fostering a stronger pace of wage and price increases”
• Uncertainty in the outlook: “There is, for example, uncertainty about when — and how much — inflation will respond to tightening resource utilization”
• “I see roughly equal odds that the U.S. economy’s performance will be somewhat stronger or somewhat less strong than we currently project”
• On monetary policy: “Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance. But because we also anticipate that the factors that are currently holding down the neutral rate will diminish somewhat over time, additional gradual rate hikes are likely to be appropriate over the next few years to sustain the economic expansion and return inflation to our 2 percent goal”
• On the balance-sheet runoff plan: “The Committee currently expects that, provided the economy evolves broadly as anticipated, it will likely begin to implement the program this year”