Yellen reiterated the Fed's view that interest rate increases in the United States would be gradual and also said the central bank was restrained in how much rates could rise, with a lower "neutral" rate, and qualified previous comments that weak first-quarter inflation was due to temporary effects, saying overnight that was only "partly" the cause.
But on Thursday, Yellen said that she believed it would be "premature" to conclude that a recent slowdown in price gains meant that the Fed would not be able to achieve its goal of 2 percent annual inflation. The Australian dollar added to 0.7679 USA dollar from 0.7642 US dollar. The Shanghai Composite index climbed 0.6 percent at 3,218.16 and the S&P ASX 200 advanced 1.1 percent to 5,736.80.
Against the yen, the greenback was 0.64 percent lower at 113.19 yen following a decline in short-term US interest rates after Yellen's testimony.More news: Lewis Hamilton: I don't dodge my fans
The US economy is healthy enough for the Fed to raise rates and begin winding down its massive bond portfolio, though low inflation and a low neutral rate may leave the central bank with diminished leeway, Ms. Yellen said on Wednesday.
In her testimony on Capitol Hill on Wednesday, Yellen indicated that the Fed will take a cautious outlook to tightening policy amid an uncertain outlook.
Yellen's comments to U.S. lawmakers on Thursday and overnight signal that while the central bank remains keen to continue to lift rates, there's no rush and the Fed may be close to a neutral rate. "The last decade, something like 1.1 percent", Yellen said, adding that labor force growth is also on the decline, which would pose a challenge. It gained 22 cents, or 0.5 percent, to close at $47.74 per barrel in London. She also said that the Fed will be monitoring inflation closely, and that the pace of price rises should be below the bank's two percent target. On Friday, reports from three of the biggest USA banks - JPMorgan Chase JPM.N , Wells Fargo WFC.N and Citigroup C.N - are expected. The trade-weighted index was at 77.91 from 77.56.More news: Sunderland land Everton winger McGeady and Bury striker Vaughan
Yellen made her comments in semiannual testimony to the House financial services committee. However, Yellen's statement that "the Fed stands ready to adjust policy if it appears the inflation undershoot appears consistent", suggests that September rate hikes might be off the table for now and rates will not go much higher in the longer run.More news: Trump to certify Iran complying with nuclear deal
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