We're good. I'm much more nervous about what we were talking about yesterday. But like--
--detailed deposit accounts gets possible to--
Janet Yellen struck a slightly less hawkish note in her testimony before the House Financial Services Committee today than she did back in June when the Federal Reserve last raised interest rates. While she continued to stick with her framework that, as the economy continues to strengthen and unemployment falls, inflation returned to the 2% target.
She also acknowledged that inflation has been disappointing. It's actually trended down more recently. And she left open the possibility that if there were continued disappointments in the inflation performance of the US economy, the Fed could reconsider, at some point, its outlook for interest rates.
Now, for several months running, we have seen unusually low inflation readings. As I mentioned, there appear to be some special factors that partly account for that. For example, quality adjusted prices of cell phone plans plunged several months ago, and prescription drug prices also plunged. So some temporary factors appear to be at work.
--the 2% inflation target.
It is not. The inflation target in January--
The message on the Fed's balance sheet was more or less in line with the previous guidance. The Fed has been preparing the markets for the process of reducing its holdings of assets, its $4.5 trillion balance sheet. It could happen at some point this year.
Janet Yellen reiterated the guidance she gave in June that this could happen relatively soon. But she, more or less, downplayed the significance of the timing of that decision, and insisted that she didn't expect it to be particularly dramatic for financial markets.
--has expired. The chair now recognises the gentleman from Missouri, Mr. Luetkemeyer, chairman of our financial institution.
This could potentially be the last time she testified to the House Financial Services Committee. Her term as Fed chair is up at the beginning of February next year. She declined to say whether she was seeking a second term. That is not, in any case, in her gift. It is the decision of the president.
But she did acknowledge that if the topic came up, the president wanted to talk about it, she would talk about it. Overall, she was pretty delphic in terms of her own future at the Federal Reserve.