Yellen´s Testimony: Surprisingly Bullish

And the markets reacted accordingly. Stocks up, dollar and long-term yields down. Dudley may be unhappy that financial conditions were loosened… To Yellen, inflation should rebound (as they have been saying for the past several years), but now recognizes that if softness persists, the Fed will act accordingly… “It’s premature to reach the judgment that we’re not on the path to 2% inflation over the next couple of years,” Ms. Yellen said Wednesday, during a hearing of the House Financial Services Committee. She repeated her view that an increasingly tight labor market would put upward pressure on wages and prices,…

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